The next time you “opt outside,” you might just be doing it using a brand or product that got a boost thanks to REI’s Path Ahead Ventures. The Seattle-based outdoor retailer is a year into a program to provide more opportunities to founders of color and those from traditionally underrepresented groups.
REI says that in the $460 billion outdoor industry, only about 1% of retail brands are owned or led by people of color. Path Ahead Ventures aims to address that deficiency with a $30 million fund guide startups and entrepreneurs though mentorship, production and distribution needs, networking, cash flow assistance and more.
The initiative features two accelerator-type programs, called Embark and Navigate, depending on whether a founder needs help with an initial idea or an existing business.
The first cohort of six startups participating in the Navigate accelerator were chosen this summer, and they will be featured on Oct. 29 at a showcase event at REI’s flagship Seattle store.
A team of retail, tech, and investment professionals leading the effort includes Mina Yoo, the founder of gear-holding gadget Heroclip, which was acquired early this year. Yoo is serving as entrepreneur-in-residence.
Path Ahead Ventures is led by Dan Kihanya, a tech veteran with years of startup experience. GeekWire caught up with Kihanya to discuss the initiative, how it works and more. Our Q&A has been edited for length and clarity.
GeekWire: What was REI looking to do with Path Ahead Ventures?
Dan Kihanya: “Even though there’s a lot of work to do on many fronts that REI is pursuing around our employees, our customers, and the overall industry, we took a hard look specifically around the supply chain and where brands stood [in representation.] Currently there’s an estimate that only around 1% of brands in the outdoor industry are owned or founded and led by people of color. As a part of our racial equity work, we said, ‘How can we make a difference in the industry?’ That was really the overall impetus for Path Ahead Ventures.”
GW: How is REI using the $30 million?
Kihanya: “We actually have two programs. One is kind of a pre-accelerator or our startup school called Embark and for participants in that program — we had one cohort so far, which was 27 people — each receives a $10,000 grant, which is non-equity, non-dilutive. And then for the Navigate accelerator program, they each receive a $25,000 grant. And depending on the stage and the needs of those companies as they grow, there’s also opportunities for separate investment in them.”
GW: What are you seeing in the outdoor space in general? Is there is there more of a need getting off the ground? Is there more of a need in getting into established retailers like REI? What are some of the bigger needs for these for these brands?
Kihanya: “We spent a lot of time last year before we launched Path Ahead Ventures really digging into discovery with hundreds of discussions and secondary research into what are the challenges, not just for any founder, but specifically for founders from underrepresented backgrounds. What we heard overwhelmingly falls into five themes:
- Mentorship. They feel like there’s a lot of ‘they don’t know what they don’t know.’ People who can help guide that connection of what are the choices, what are the journeys that they should be looking at in terms of how they grow their business.
- Production and distribution. Everything from how do you manage the supply chain to distribution channels, whether they are wholesale and retail or direct to consumer.
- Cash flow. Initial capital and helping them to find solutions to manage their cash flow needs as they grow.
- Networks. Founders from underrepresented backgrounds and founders of color come from networks that don’t overlap necessarily where their peers connect into partners, vendors, other potential investors.
- Credibility. REI has established a fairly credible reputation in the outdoor space and so a lot of founders are looking for ways that participation, engagement with us, as an entity can help provide them credibility in the marketplace as they’re developing awareness and demand.”
GW: Is there any intention, or is it case by case, that these brands might end up on the shelves in your stores?
Kihanya: “Distribution obviously is something that we’re good at and we take pride in the way that we connect to our 21 million members. So we offer that and that’s our intention for the brands that are coming through, depending on where they are in their journey and their readiness for that. We do not require it for any of the programs or investments. We are very cognizant of the fact that in certain categories, some brands may be choosing another vertical to start with, but they want to get to outdoors maybe later. Our goal, ultimately, not just for Path Ahead Ventures, but REI, is to create more diversity around the brands that are carried at REI.”
GW: Is the overall goal here, beyond helping these brands along, to maybe foster more representation or participation by underrepresented groups in the outdoors?
Kihanya: “The Outdoor Industry Association has noted that up to 30% of people who recreate outdoors consider themselves people of color. And so if you think about that number versus our 1% estimate around people who are on their producer/innovator side, it’s really more of demand-based opportunities to serve either underserved or underrepresented groups that are already starting to be in the outdoors and are looking for more potential solutions that could represent specific things for their communities.”
GW: Are you excited by what you’re seeing so far? Is the next Yeti or North Face in your midst already?
Kihanya: “It’s a little early to tell that. But we have been super excited about the response we’ve had to the programming side. We’ve had 400+ applications between the two programs. We’re really impressed with the perspectives that people are bringing in, new ways to think about the industry and making it more welcoming, inclusive. In terms of the founders themselves, we’re learning a lot, very humbly, about how everybody’s journey is really unique.”