RX3 Featured on WSJ
“RX3 Growth Partners, a private-equity firm with an array of boldface names among its backers, just closed its second main fund to invest in consumer brands.
The firm co-founded in 2018 by football great Aaron Rodgers—now quarterbacking for the New York Jets—and wealth managers Nate Raabe and Byron Roth has collected roughly $150 million for the oversubscribed fund. The total represents around triple the amount of RX3’s debut vehicle, which closed on around $50 million in 2019.
The new fund brings RX3’s total assets under management to $230 million, according to the Southern California firm. RX3 initially had aimed to raise $120 million for the new vehicle and said it attracted roughly 50 investors, including professional athletes, entertainers and musicians.
‘When we first started, we often got confused with being an Aaron Rodgers venture fund,’ said Andrew Costa, an RX3 partner. ‘The reality is, we have a lot of other well-known athletes and celebrities that are in RX3’s ecosystem as investors and partners.’
Firm advisors include actress and singer Vanessa Hudgens and comedian Kevin Hart, who also has his own venture-capital firm, HartBeat Ventures. The firm said recording artist Machine Gun Kelly, whose given name is Colson Baker, is one of the new fund’s investors.
‘When I was approached with the opportunity to join RX3, I was excited,’ said Olympic champion swimmer Michael Phelps, who won 23 gold medals and has invested in RX3’s second fund. ‘I know a lot of the other talent they’ve asked to join, making it feel like a family.’
While RX3 counts a number of celebrities as limited partners in its funds, the firm refers to itself as a growth-equity investor that happens to have high-profile backers in its corner and doesn’t seek to be identified as an athlete-centric or celebrity fund, according to Mr. Costa.
The firm plans to use its newly raised capital to back consumer brands, particularly in the wellness, beauty, pet, baby and active lifestyle categories. Companies it has backed include internet-connected rowing machine maker Hydrow and camper van and trailer company Taxa.
The first fund raised by RX3 has been fully invested, and four of those bets have been realized through exits. Companies it has exited include fresh dog food supplier NomNomNow and eyewear maker Prive Goods.
Investing from the debut fund provided lessons for the firm, its managers said. RX3 began by writing checks of $3 million to $5 million, but sometimes went down to $1 million to $2 million. Now the firm looks to invest from $7 million to $10 million initially.
‘We found out very quickly that it’s a lot of work to activate our network and to provide the value we provide to our brands,’ Mr. Raabe said. ‘So we need to align our check size with the investment and amount of work we put into each brand.’
The firm now looks for companies that are poised for profitable growth or that can show a clear path to profitability, according to the RX3 website.