Starco Brands founder Ross Sklar
How do you build a multi-million dollar company from scratch? For Ross Sklar, who has done just that with Starco brands since launching the company in its current guise four years ago, the answer could be summed up as playing to your strengths. Entrepreneur Sklar has expanded Starco through a combination of careful management and strategic acquisitions, largely avoiding day-to-day involvement in operational matters in favor of encouraging collaboration and making smart agreements.
“My skills are in closing deals and bringing people together,” explains Sklar. “If you can recruit the best talent to run your business, you have a real chance of making it work.”
It’s an approach that has seen Starco make three major acquisitions since gotechbusiness.com first met the company just under two years ago. First, in September 2022, it acquired Art of Sport, a personal care company focused on athletes and sportspeople co-founded by basketball star Kobe Bryant. That was followed in January with the acquisition of Skylar, which produces a range of hypoallergenic fragrances, and then in February with a deal to acquire Soylent, a plant-based beverage company.
With the global economy faltering and businesses everywhere still suffering from the after-effects of the Covid-19 pandemic, this period may not have been the most obvious time to launch a M&A wave. Global M&A deal volumes have indeed fallen off a cliff over the past year.
However, Sklar believes that now is exactly the time to take advantage of new opportunities. “I’ve always thought that difficult times can be the time to make a move,” he argues. “When you sit back and lick your wounds, you almost always discover that you’ve missed an opportunity.”
Each of Starco’s acquisitions is an example of this. First, with Art of Sport, Sklar was a fan of the company long before Bryant’s tragic death in 2020, but noted that it was struggling with Covid-19. “We started talking to management about how we could help,” explains Sklar. “What we saw was a company with a huge opportunity to play in so many different segments because it wasn’t just a sports and leisure brand.”
The company’s existing range of body and skin care products, designed specifically with athletes in mind, has had some appeal, Sklar points out, but he also sees opportunities to expand into areas such as sports drinks, supplements and similar products. The sports drink market alone is growing at a rate of 4.8% per year, according to research by Allied Market Research, and could be worth as much as $22 billion globally by 2031.
At Skylar, meanwhile, Sklar was excited about a company that was “developed by a great founder with a huge vision.” Skylar had developed the first hypoallergenic range of prestige fragrances for the mass market, aimed at a younger customer base willing to try different scents and sign up for subscriptions. But it was run for scale rather than profit. “The products were unique,” says Sklar.
Again, it’s a huge market with untapped potential. Sensitive skin products generated sales of more than $40 billion last year, according to Grand View Research, with the market expected to grow at nearly 9% per year. Yet few companies have identified fragrances as a potentially valuable subset of that market.
Turning to acquisition number three, Soylent is responding to massive demand from customers concerned about their health and wellness, which continues to grow in the wake of the pandemic. Products such as Soylent’s beverages are purchased by customers focused on tracking the nutritional benefits of what they consume, but more broadly there is a growing interest in beverages as potential meal replacements. Statista predicts that the value of the plant-based nutrition market could grow from about $29 billion in 2020 to as much as $162 billion in 2030. “There’s also an opportunity to make nutrition accessible to everyone,” says Sklar, who points out points out that cash. Families with a shortage of food may also find the product useful if they want to eat healthily.
Sklar’s focus is now on strengthening the acquired businesses by enabling them to leverage the expertise and experience of the wider group. For example, Soylent could benefit from Starco’s track record in experiential marketing – it has worked closely with music star Cardi B to build a brand for its Whipshots company, which sells whipped cream with vodka. All three companies are leveraging some kind of behavioral change in wider society, Sklar points out, so that also creates opportunities for idea sharing and innovation.
At Starco Brands as a whole, revenues have now grown to approximately $70 million per year. The company is listed on the OTC market, the decentralized stock market where investors can buy and sell shares of early-stage and emerging companies. That’s been important because it’s allowed Starco to grow in part through equity financing deals.
“This is the value-building phase for the company,” says Sklar. “Are we looking at the senior exchanges like Nasdaq or New York? Yes, but we don’t feel any pressure and we will do it within our time frame.” In the meantime, private equity and venture capital investors in the kinds of companies targeted by Starco have the option of taking a stake in the company when they sell out of their own portfolio holdings. Andreessen Horowitz, GV, Upfront Ventures and Lightspeed Partners have all become Starco shareholders in this way.
Entrepreneurs must be patient and choose their opportunities carefully, Sklar emphasises. It’s something he learned while building the Starco Group, which has assembled a string of consumer products companies over the past 20 years, either through organic innovation or through acquisitions. The realization that Starco was not capturing the full value of its intellectual property led to the launch of Starco Brands, and now Sklar hopes he is on his way to closing that gap.
