Celebrity Chef Paula Deen Receives VC Funding For Comeback Attempt

Paula Deen, the one-time celebrity chef dropped by the Food Network for racial slurs used during a legal deposition, is being given a comeback opportunity.

Paula Deen, a Savannah, GA based cook known for her southern style cooking and characteristically southern wisdom she dispensed on her show, will receive between $75 million to $100 million from a venture capital fund to stage a comeback. Under the terms of the deal, Paula Deen will roll up her restaurants, cookbooks, product endorsements and other media arrangements into one firm, Paula Deen Ventures, which will receive the venture investment.

Paula Deen partners with strategic fund

Deen selected a strategic partner for her investment, Najafi Cos., a private equity firm led by Jahm Najafi, owner of the Book-of-the-Month Club and BMG Music, who brings distribution and marketing firepower to the partnership.

In a report in The Wall Street Journal, Phoenix-based Najafi Cos. said the capital will help Paula Deen establish new deals and move away from a pure licensing model, in which she sells her likeness and expertise to others. Instead, she hopes to take more ownership and control in partnerships with retailers and other companies. Food-industry veteran Steven Nanula was brought in to be chief executive of Paula Deen Ventures, the report said, and the company is in talks with TV networks, retail chains and other possible partners. The new firm has yet to announce a television contract or a major deal – and the Food Network says it has not yet been approached for a Deen revival – Paula Deen Ventures declined to name the TV networks and potential partners it has contacted.

Investing on a drawdown with Deen

Najafi, part owner of the Phoenix Suns basketball team, is known to favor “investing on a drawdown,” or investing when a stock or investment is out of popular favor. Najafi said in the report he doesn’t think Deen is an extraordinary risk and her brand is strong and she has support from a core fanbase across the U.S.  Subscriptions to Paula Deen’s magazine are up 40% and her recent appearances have drawn standing room only audiences.



About the Author

Mark Melin
Mark Melin is an alternative investment practitioner whose specialty is recognizing a trading program’s strategy and mapping it to a market environment and performance driver. He provides analysis of managed futures investment performance and commentary regarding related managed futures market environment. A portfolio and industry consultant, he was an adjunct instructor in managed futures at Northwestern University / Chicago and has written or edited three books, including High Performance Managed Futures (Wiley 2010) and The Chicago Board of Trade’s Handbook of Futures and Options (McGraw-Hill 2008). Mark was director of the managed futures division at Alaron Trading until they were acquired by Peregrine Financial Group in 2009, where he was a registered associated person (National Futures Association NFA ID#: 0348336). Mark has also worked as a Commodity Trading Advisor himself, trading a short volatility options portfolio across the yield curve, and was an independent consultant to various broker dealers and futures exchanges, including OneChicago, the single stock futures exchange, and the Chicago Board of Trade. He is also Editor, Opalesque Futures Intelligence and Editor, Opalesque Futures Strategies. - Contact: Mmelin(at)valuewalk.com