How to Get an Exit as a Nutrition Brand: Clinical Trials Edition
Why you've been thinking about Clinical Trials the wrong way
As a founder in this space, I spend most of my waking hours thinking about who my potential customers are, what their pain points are, and how I can help them get what they want.
As it happens, I’ve been thinking about why companies would pay for clinical trials for over 6 years now, since I started my research career with a commercially funded project.
Even now, I’m learning new reasons why the best in the business prioritise the accumulation of clinical evidence, and why it’s increasingly no longer an option unless you’re a cheap brand.
As you may have guessed from the title…
This one relates to Exits and how you can exit sooner and at a higher valuation as someone in the health/nutrion space.
The conversation that reframed it for me
“The pure marketing companies, the ones with slick branding and zero data behind their ingredients, are dead in the water. Not today, not next quarter, but on any timeline that matters for an exit.
There is nothing tangible underneath them. Nothing an acquirer can defend. Nothing a competitor cannot copy with a better designer and a bigger ad budget.”
I had this said to me almost word for word by a private equity guy a few weeks ago. He told me his team will not touch a supplement brand without clinical data on the active ingredients. Not because the data drives the topline, although it helps. Because without it, there is no moat. The asset is just a logo and a Shopify store.
That reframed the whole question for me.
I had been thinking about clinical trials as a mechanism for increasing consumer trust and converting sales (which they still are great for), but I hadn’t really considered the implications of trials for valuation.
Two companies, same revenue, very different multiples
Now imagine you’re an investor in charge of the dream investment fund you want to be acquired by
Across your desk/laptop, come two companies:
Same revenue
Same margin
Same unit economics
Same category
One has clinical trials behind its hero ingredient. Five, ten, fifteen studies across different populations and outcome measures.
Real investigators, real data, real publications.
The other has one? Just good marketing.
Which one gets the higher multiple?
It is not close. The one with data gets a premium because the buyer is not just buying revenue. They are buying:
Defensibility against competitors
Something that cannot be replicated by spending more on ads
Years of head start that money alone cannot compress
A diligence story that already answers the hard questions
The KSM-66 counterfactual
Look at KSM-66. They turned ashwagandha, a herb that has been sitting in Ayurvedic texts for two thousand years, into the dominant branded ingredient in the category.
Trial after trial.
Stress.
Sleep.
Strength.
Testosterone.
Cognition.
Recovery.
Different populations, different endpoints, year after year.
Now imagine the alternative universe. Same branding. Same distribution. Same partnerships. No clinical programme. Same ashwagandha, same supply chain, no data.
What is that company worth?
A fraction? Maybe a tenth? Because without an evidence base, KSM-66 is just one of 50 ashwagandha suppliers competing on price.
The trials are the moat. The branding is just the wrapper.
The honest part: bad data is worse than no data
Now, before you go running to do a trial, here is where I would advise you to exercise caution, because the logic only works if you do the research properly.
What do I mean by properly?
A poorly designed trial will hurt you in diligence. An acquirer’s scientific team will read every protocol you have ever run. They will find:
Underpowered studies
Methodological holes (Single-arm designs and no controls)
Endpoints that do not match the marketing claim
Investigators with no credibility
And they will price it all in.
What actually compounds valuation is a research programme that is hard to copy:
Multiple trials across multiple populations
Outcome measures that no competitor has validated against
Credible investigators and peer-reviewed publications
Endpoints that map to a clear differentiation story
When a buyer asks what makes you different, the answer should already be sitting in a journal. Not in a pitch deck.
The Bottom Line
If you are running a brand and thinking of research purely as a marketing line item, I would gently push back. You are leaving the bigger prize on the table.
The marketing return is real, and you’re right that it is the most immediate.
It is, however, also the smaller of the two outcomes.
The larger one is what the company is worth when you decide to sell, and whether anyone wants to buy it at all.
I am still working this out in real time. But the pattern is getting clearer the more investors and founders I talk to. The companies that win the exit are the ones that started building the evidence base years before they needed it.
If that is the game you are playing, the question is not whether to invest in research.
It is how fast you can get it done.
If you want to find out how fast…
— Nathan
