How Many Consumer Brands Are Secretly Bankrolled By Mom and Dad?

“Certain business models should not be attempted,” she said, “unless or until you have the financial safety net.”

A few weeks ago, I was on the phone with a mentee who told me her main goal over the next three years was to land a major retailer for her consumer brand. I have some experience with this, but not tons, so I asked if she could name any advisors, other mentors or connections who could help. She struggled to - but I recalled her naming someone a while back that sells their brand in one of the biggest retailers in the country. Ugh! I love my brain. Could she bring them in for guidance or intros?

“Oh,” she said, “their family’s put in a lot of money and is super connected. They helped them with that, so…”

“What do you mean?” I asked.

We didn’t go much deeper, but in the silence that followed I knew exactly what she meant.

As a quick reminder…hundreds of thousands of dollars:

• Pays for research and development.

• Pays for any product testing you legally have to do.

• Pays for your packaging design and branding.

• Pays for your initial run of inventory (which can, in itself cost over 100K - easily).

• Pays for your first marketing push.

• Pays for expensive retail fixtures, vendor compliance, pricey retail purchase orders, and so much more…

I did a little digging after the call to see if the founder had ever spoken publicly about these connections, to give proper attribution to their immediate retail presence and success. They launched with that retailer shortly after coming to market. Instead, I found a lot of interviews and social content positioning the founder as a “super young” but talented corporate manager, then CEO, who had to overcome age discrimination, as well as endless “how-to” videos about everything from early hiring and branding to business-building. There’s a fair amount of messaging around following your passions, going all-in and believing in yourself (which are all valid!).

I sat and tried to untangle why all this content made me feel so icky. I first had to ask myself if I was jealous of this founder’s access to the Big N’ Juicy Parental Wallet. I grew up upper-middle-class, but my family’s financial collapse began when I was 15 and bottomed out when I was 18 and my parents divorced. But at no point could my parents have gifted me hundreds of thousands of dollars.

Was I just bitter that my mom couldn’t fund my dreams? No. No - it wasn’t that. I’d worked on my financial spite and anxiety in therapy, I know I genuinely grow by making my own dreams and goals come true, and I’m not on the cusp of launching a consumer brand - so there’s no fertile ground for envy, there.

And in general, I don’t usually care or judge what other people around me do, especially on social media, and especially when it’s enterprising people just trying to tell their story, connect with their audience and inspire others to believe in themselves!!!

So - why, Ali? WHY?!

Much like the New Yorkers who are secretly subsidized by their parents so they can afford their Brooklyn brownstones, childcare, keratin treatments and private school tuition, there are many founders, usually in consumer, who are similarly sponsored by mom and dad. A “Startup Nepo Baby,” if you will.

This looks different for every company - not every “sponsorship” looks the same. And most of them are completely benign, to me at least.

Sometimes, the parents and their friends are part of a “friends and family” round during the brand’s early stages. This is typical and happens all the time in consumer and beyond. An ambitious, visionary child puts a plan together for the brand they want to build and the business they want to run, and develops a sense for how they’re going to scale it, and their parents - who have worked hard for what they have - decide to back them. Some family friends jump in, the child motivates and inspires other people to support, like mentors, peers and friends (hence the name, “friends and family). I think it’s wonderful - and there’s no shame in this game if you’re of a certain socioeconomic class where this is your story, or could be your story. From here, typically, the founder is off to the races, taking angel checks or institutional money from VC firms, or using revenue to fuel the business as it grows. The parents are out of the picture and are watching their kid from the sidelines, eager to see what happens to their 35K check (too often: nothing), but proud of their offspring nonetheless.

I know of a *different* situation wherein a company, saddled with operating costs, would nearly go under every two months. The founder’s parent would come to the rescue at the last minute, time and time again, to infuse it with hundreds of thousands of dollars in cash.

That company is still in business. Who knows if it’s still stuck in this cycle, or if the parent’s generosity was able to catapult it out of that era and into one of actual profitability and promise.

I know of multiple situations where the parents are major shareholders - meaning they have meaningful stakes in the company because they didn’t just cut a 35K check - they put up to millions into the brand. These parents maneuver on behalf of the business, like the example I gave up top with the Brand getting into the Retailer. They are well-connected and make introductions. They will network with funds or commit their own cash to a bridge round of financing before they’d ever let the company die outright.

This particular industry is rife with entrepreneurs performing mega-successful girlbossdom who haven’t disclosed a few critical factors explaining how they can afford the mega-expensive inventory they plan to re-sell or pay the $16,000 a month fee for the showroom they use only 3 times a week.

And I know of many people who think of their brand as more of a hobby than as the engine that fuels their livelihood. They’re able to move this way because of a wealthy parent or spouse who runs the engine that fuels their livelihood. Vroom vroom! I was just with a friend discussing this exact phenomenon, and she nearly fell out of bed with excitement about the topic. She’s been in a very specific industry for 12 years - and she’s damn good at it, I might add - and this particular industry is rife with entrepreneurs performing mega-successful girlbossdom who haven’t disclosed a few critical factors explaining how they can afford the mega-expensive inventory they plan to sell or pay the $16,000 a month fee for the showroom they use only 3 times a week. In her industry, much like in consumer, you’re paying an ass-ton upfront for inventory you’re not necessarily selling right away. And you’re paying to store it. And to market it. Bye bye margin. And if there’s middle men, you’re losing even more margin.

“Certain business models should not be attempted,” she said, “unless or until you have the financial safety net.”

And this is why these curated social media narratives have me deeply concerned - especially in this economy.

I don’t take issue with founders who use the resources at their disposal: family and friend rounds, family connections, or even mommy and daddy bail-outs. I know first-hand how incredibly difficult it is to run and scale a business, and how life-or-death it feels when your company is two-months away from going under. I cannot claim I’d refuse a check in that situation - whether it came from an accredited investor I met via warm introduction, or the person whose titties I sucked in my first year on earth.

The problem is, many people are attempting these fragile, high-cost business models without that safety net, not seeing the same results, comparing themselves to these secret Instagram and Tik Tok Nepo Babies, wondering wtf is wrong with them, and banging their heads against the wall.

And in many cases, they are motivated by the Empowerment Narratives, effusive interviews and toxically positive “how-to” videos these founders are pumping out as part of their personal brand-building efforts.

75% of Gen Z “wants to be their own boss,” but meanwhile, they are saddled with debt and using credit to cover student loans, basic living costs and the mounting impacts of inflation. These realities are impacting startups and small businesses, too. Tech Crunch predicts 2025 will see another startup apocalypse due to high interest rates and lack of available funding, especially in consumer. Small businesses are struggling to survive inflation, economic uncertainty, and a slowdown in consumer spending.

Money fixes all the booboos. It’s as simple as that. The “rescued” founder I mentioned - the one saddled with operating costs who nearly went under every few months but received cash from a parent who saved the day? Had that not been a Nepo Baby founder, that business would be dead.

Money also removes the need to ruthlessly prioritize, which is such a common area of stress and strategy for founders. My brilliant friend emphasized this to me in our convo, so I want to give her credit. With financial support from your parents and a psychological sense you can get “bailed out,” you’re able to prioritize all the things: community, brand, design, growth, product - whatever. She and I both know first-hand, even though we’ve run entirely different businesses, that every day is Hunger Games when you’re bootstrapping or working with a limited pool of money to pull from. You have to be smart and careful about what you invest your coins and time in, and you can’t do it all - or do everything well.

Which brings me to my last point here. With parental money and connections, you can get the best of the best. You can do a lot of things well. One could argue that it’s infinitely easier for a brand to be successful if you hire a renowned branding agency, an experienced marketing consultant and the best publicist with all the right editor relationships. The hosts of the podcast Snark Bait mention this in passing a fair amount when discussing the influencer, best-selling author and creator, Tinx. They allege she was able to “pop off” so quickly because she allegedly comes from money, so her parents (allegedly) hired her a really amazing publicist to help flood the zone and help get her name out there. I don’t know if this is true, and I have other things to say about Snark Bait another time.… But the TLDR is: money buys time. Money buys quality. Money buys speed.

So the question becomes (!) - do founders really owe us - the audience, the consumer, the community, the customer - unclassified, open-file information on how they got where they got in their life and career?

Obviously, if the story helps the founder gain favor and credibility with their particular audience, it’s in their best interest to disclose their origin story and how they’ve financed and grown the business. It’s in their best interest to share - as long as the story helps.

“How this Founder Used all her College Savings From Working at Walgreens to Launch Her Own Bodycare Brand.”

“How this Founder Turned His Love of Hot Sauce - and a $30,000 Bank Loan - Into a Tik-Tok Viral Condiments Brand.”

“This Founder Put Herself Through Nursing School and Realized Healthcare was Broken. 100 VCs Rejected Her - Then, They Came Calling.”

These are totally made-up headlines - but you know the genre. Salt-of-the-earth founders pulls him or herself up by the bootstraps, finances and builds the “conventional” way, and forges ahead on their own merit. This story works. It offends no one. It’s hard to poke holes in. There’s nothing to punish.

But imagine a founder outright disclosing to the press and to their audience that their parents funded the company from the jump, have written checks to maintain the company’s momentum, and are a driving force behind why the brand has so many great connections and partners.

Let’s be real: they’d get crucified, especially if the founder is a woman.

There’s this trope on social media and on reddit that it would be “totally fine” for women to:

1. Get work done on their face or body.

2. Leverage parental or spousal resources for their business or their influence.

3. Have paid help around the house.

IF THEY JUST ADMITTED IT! If they just owned it - “we’d be fine,” they say! “We’d accept her with open arms,” they say! “We’d shut up,” they say! “We’d move on!”

No - no, you wouldn’t.

Because as soon as a woman discloses something like this - it becomes a blunt instrument others use to undercut her:

1. Beauty.

2. Success.

3. Motherhood.

How many times have you seen comments online or heard people in your real life say shit like:

“Yeah but her husband’s rich, so…”

“Yeah but she got all that money from the divorce, so…”

“Yeah well, must be nice! She has the nanny and the housekeeper, so…”

“She’s not naturally beautiful. She’s admitted to botox and lips and that nose job 3 years ago, so…”

There is SO much in the “so…”

I wonder if Jayne Mansfield just said she had a nanny AND a housekeeper.

I think in this era - one that is so polarized, one that lacks nuance, one that has turned grievance into a lifelong badge of honor instead of a good ole kick in the ass - founders, but especially women, disclosing this “leg-up” or unfair advantage is…what’s the word…unsafe?

A big part of me fears it would overshadow all their late nights, their tough moments of leadership, their resilience, their vision, their chutzpah! Not all people with generous parents decide to start and scale a business, and most people don’t succeed! And while money makes things easier, and faster, and better - the product still has to hit. And figuring out how to do that - as expensive as it may have been - is not easy, and it is not guaranteed. Not even in the slightest. I fear this disclosure automatically robs the founder of their success, and I don’t like that.

To me, as long as these founders aren’t also positioning themselves as business gurus or profitability experts on social, I think they have a right to keep things focused on the product and the brand experience - and do NOT owe us the tea on how they financed or grew the brand (hence why I’m not naming names, and making up every single company, headline and example in this piece).

My issue with the Founder With Family Connections is that they are outwardly framing themselves as self-made in some way. They are completely skipping over how they tackled the HARDEST PARTS of “business building” but giving advice, or creating highlight-reels, about curated elements that ignore how fragile entrepreneurship truly is. And when so many young people want to BE an entrepreneur these days, in such a fragile economy, I’m not sure if this is totally kosher-slash-responsible.

No offense (or maybe a little? Idk. I’m still getting used to sharing my opinions online), but:

• Saving UP for R+D or for that first batch of inventory, while working a full-time job or juggling part-time gigs, requires discipline and strategy and commitment that these founders didn’t have to go through. I’m sorry. But ignoring the part where you were just… handed a check… it’s calculated!

• Pitching investors, forging through the rejection, and maintaining your conviction throughout is a psychological bootcamp these founders skipped, so they can’t speak to it. But it’s literally one of the most formative parts of business-building and - one of the hardest. If you need someone who has DONE the damn thing, watch every Olamide Olowe interview you can. As a young Black woman (Black women receive under 1% of VC funding annually) - and only 21 - she pitched over 100 investors for nearly 2 years who rejected Topicals over and over again. All it took was one investor to see the vision. But this was after years of grinding - a genre of hustle the Nepo Babies have not been through. Ditto for bootstrapping and patiently using revenue over many years to scale your business - it is a genre of hustle these Nepo Babies can’t talk about. I recommend reading and watching interviews of Meg Strachan, CEO and founder of jewelry darling Dorsey, who was rejected by investors and bootsrapped with only $1,000. [From the linked article: Dorsey had to be profitable from the start or there wouldn't have been a business," Strachan says. Fortunately, it was: It's since developed a cult following, counting Justin Bieber among its many fans; saw 600% year-over-year growth in 2022; and boasts a double-digit EBITDA.]

• Pivoting and rescuing your company from potential collapse is a chaotic, troubling, psychotic event that most founders have had to face at some point. I do not expect anyone - Nepo Baby or otherwise - to broadcast the realities of this event. I did it in my first book, but not in real-time on social. All I’m saying is - not having to ever go through this is a huge blessing - and I’d argue it allows for the founder to remain more psychologically “even,” when their audience or acolytes are having a much more volatile experience.

To me, bootstrapped and traditionally funded or financed founders comparing their highs and lows to these “sponsored” business owners who can get bailed out any minute, and have parental cash readily available, is the same thing as 17-year-old-girls in Idaho comparing their normal teenage faces to that of a young Bella Hadid or Kylie Jenner, both of whom had expensive work done in LA before the age of 18 and hid that fact for a long time. It’s not an even playing field. It’s not a fair fight.

You’re not a bad founder, you just don’t have access to the Parental Wallet!!!!

But I’m not sure what the answer is.

Is it the public-facing founders doing these “how-to” videos and business tips, also offering real-time disclosure about their parents, in the name of transparency and authenticity and “doing the right thing?” Let’s say we don’t want founders running around here feeling like the woe-is-me Idaho girls and the answer is the Kylies and the Bellas saying “I’m funded by my parents” (which in this comparison - both of them did. Kylie admitted to her lips, Bella to her nose) and leaving the fallout in the hands of the universe.

I’ll tell you what could happen, because I saw it with my own eyes.

I knew a founder who knew a bit too much about this girl’s dad and that girl’s dad and she cultivated this deep sense of injustice. She internalized that this whole thing - getting money, making products, scaling up, getting more money, locking in a retailer, all of it - was a game with no rules, no referee, no oversight. She felt like she was starting the game with zero points, but many in her cohort - who were also chronicling their founder journeys and offering business advice on Tik Tok - were starting with 15 or 20 because of their family money or connections.

I don’t think having the information helped her. I think it hurt her - badly. I listened as she spoke ill of these women and undercut their success. And then slowly, this sense of injustice made her consider doing unjust things. These girls she knew, who disclosed to her - who trusted her - accidentally turned her into a fraud.

She said: this isn’t a level playing field, so let me level it.

The game is rigged, so let me do some rigging.

I fear that exposing how many founders have a leg-up will only deepen the sense of grievance so many young people already feel. I fear it will undercut the merits of these businesses, of which there are MANY. I fear it will expose how broken the system is, and lead people to break the rules in other ways.

So is the answer for these Nepo Babies to stop acting like they’re business gurus? To stop creating videos with messaging like “JUST GO FOR IT!” because, well, not everyone should go for it? In this economy? Without the financial safety net that you had?

I’m not sure, but I’m a bit more comfortable with this one. I think this approach still leaves plenty of room for the founder to create founder-led content that is compelling, community building and educational, without inadvertently weaving toxic positivity and a sprinkle of recklessness into their guidance.

What do you think? I’m genuinely curious.

Talk soon,

Ali 🧘‍♀️