Wolf in Shepherd’s Clothing: Siddhi Capital’s Overreach in CPG Investing

One of my greatest professional joys has been advising, investing in, and championing early-stage CPG companies. I thrive on the energy and relentless passion founders pour into their products—whether it’s a can, bottle, or supplement. These entrepreneurs are driven by a focused devotion to creating goods they believe will enhance lives. Their enthusiasm is contagious.

But as these companies grow and their cap tables expand, it’s rare for every new addition to share the same vision for the future as the founders. Siddhi Capital, which markets itself as a “growth equity partner,” has made inroads with several early-stage CPG brands I know well. At first glance, Siddhi appears to be a force for good, providing capital and operational expertise to support companies through critical growth stages. However, for one company I both invested in and advised significantly, Siddhi’s methods have proven to be more aggressive—and, quite frankly, detrimental to the founder they pledged to support.

A Case Study in Aggressive Capital

In this instance, Siddhi joined as an operational partner, gained a board seat, and co-managed a Series A round in which a substantial portion of pledged capital—millions—ultimately fell through. Despite this shortfall, the company’s other investors were left entirely unaware for months as the business moved forward with costly retail rollouts dependent on full funding. Siddhi, at the operational helm, not only sanctioned but encouraged the founders to proceed with purchase orders that could not possibly be fulfilled without the missing capital.

Siddhi’s dual role as co-manager of the fundraise and board member granted it significant control, yet it was only when the company teetered on the brink of insolvency, with less than one week of cash remaining, that Siddhi finally led an emergency meeting. Over 40 investors were blindsided as Siddhi disclosed the funding gap they had long known about but had yet to reveal.

During the meeting, Siddhi unveiled a so-called “rescue” term sheet. Having previously assured the founding team they would “fill the gap,” Siddhi’s delayed offer now seemed suspect at best, and opportunistic at worst. The term sheet, projected for all to see, laid out draconian terms: a three-times liquidation preference, operational control of the business through two new executive placements, and a staggering 22.5% in warrants pegged to the company’s distressed valuation. When the founders consulted external advisors, the assessment was unanimous. “Predatory,” one expert remarked; “Machiavellian,” in the words of another.

Adding to this, the term sheet imposed a shortened 18-month maturity date (rather than the standard 24) on the convertible note. Siddhi committed to contribute only $2 million of the $5 million they expected to raise, and the debt would convert to equity only if the company managed to secure an additional $10 million in financing within those 18 months. The crux of the plan was laid bare on the investor call, led entirely by Siddhi’s team, where they emphasized “a shift in focus from aggressive growth to profitability.” This approach, all but guaranteeing the note would remain unconverted, left Siddhi poised to reclaim their capital as debt and duly to claim whatever remained in the carcass thereafter.

Although Siddhi framed its proposal as a last-minute save, other investors saw it for what it was: a strategy to prioritize Siddhi’s own payout, irrespective of the company’s outcome. Siddhi would profit handsomely from either a successful turnaround or, failing that, a liquidation that would leave other investors with next to nothing.

Siddhi used the gravity of this call and their “white knight” rescue plan to push existing investors to double down. They positioned themselves as essential backers but attached terms so punishing that it forced other investors to either join the note on Siddhi’s terms or risk being washed off the cap table. The combination of the liquidation preference, hefty warrants, and demands for operational control was akin to Siddhi torpedoing the Titanic and then selling seats on the lifeboats.

I am, at time of writing, in the process of reaching out to founders of other companies in Siddhi’s portfolio to determine whether this instance is a one-off or indicative of a broader approach. For now, it’s clear that some founders have expressed concerns.

Another investor confided, “…how is what they did not breach of fiduciary duty…it seems immoral at best and possibly illegal.” Fairly recently, a founder in discussions with Siddhi about a potential investment reached out to ask my opinion on the fund and their practices. She shared that she “was getting the vibe that they want now, or will soon want, to take control of my business”.

The Tactics: From Partnership to Power Grab

What’s particularly concerning is how Siddhi positioned itself operationally to leverage influence. Beyond their capital stake, Siddhi took control of key decisions, installed their members of their team on the board and at the operational helm of the business. This structure effectively sidelined the founder who had, until that point, run his company fairly unfettered, rendering Siddhi the de facto captain of the ship. What they had pitched as “strategic guidance” became, in practice, a takeover in slow motion.

Above is the email I sent to Siddhi Capital immediately after the call referenced in this post. Sensitive information, including the company name, founder, and other details, have been redacted.

A Singular Case but a Cautionary Tale

While this account is based on a single direct observation and brief conversations with a few others, it raises serious questions about Siddhi’s intentions. At least one other founder has asked me for advice on Siddhi, wondering if their support came with strings attached.

To be clear, I’m not (yet) suggesting this is a pattern. But Siddhi’s approach in this particular case should give any founder pause. Siddhi has marketed themselves as “operators,” but in this instance, their actions align less with growth equity and more with private equity—a world where the focus often shifts to securing a payout regardless of, or even at the cost of, the founders’ vision or equity.

A Call for Caution and Accountability

For founders considering a partnership with Siddhi, I’d recommend both careful scrutiny of their terms and a close watch on how they conduct themselves in the early stages of your partnership. What may seem like supportive guidance can be barbed with demands for control that take a while to dig into the roof of your mouth.

I know hundreds of founders in this space—they are some of my closest friends and certainly the largest single source of inspiration. Ours is a space that relies on trust and collaboration. As both a founder and an investor, I’ve seen relationships between investors and founders elevate a company, but I’ve also seen those relationships become the very cause of a successful business’s demise.

Siddhi’s actions in this instance show how quickly a “growth equity” partner can turn into something far different. Until Siddhi demonstrates a commitment to founder-friendly practices, their partnerships should be approached with a high degree of caution.