Brand authenticity is something successful entrepreneurs are able to create, and big corporations are increasingly being forced to buy from them, said the co-founders of CAVU Ventures Partners.
"You can't outsource authenticity. Entrepreneurs are really good at ... creating these brands that have heart and soul," CAVU's Clayton Christopher told CNBC's "Squawk Box" in an interview on Friday. "That's what big companies are starved for."
"It's much less risky for these big companies to buy small brands that have proven some level of success," he added.
Christopher, an entrepreneur turned venture capitalist, certainly speaks from experience.
He founded Sweet Leaf Tea in 1998 with $12,000 and a recipe from his grandmother. Nestle, after an initial investment of $15.6 million in 2009, bought Sweet Leaf outright two years later.
Deep Eddy Vodka, co-founded by Christopher in 2009, sold for nearly $400 million to Heaven Hill distilleries about six years later.
After raising $150 million, CAVU Ventures started at the beginning of this year, with a concentration on consumer food and beverage companies. Their investments include Bai drinks, Chef's Cut jerky, and Austin Eastciders.
CAVU stands for Ceiling And Visibility Unlimited, an aeronautical term meaning great flying weather.
"My lovely wife came up with that. She's pretty creative," Christopher said, adding it's an aspirational mantra for the company.
It's much less risky for these big companies to buy small brands that have proven some level of success.Clayton Christopherco-founder of CAVU Ventures Partners
Brett Thomas, who started CAVU with Christopher and former Coca-Cola executive Rohan Oza, said that big consumer products companies are "outsourcing all their innovation to today's entrepreneurs."
Thomas said Unilever's reported interest in buying The Honest Company, is a perfect example. The firm, co-founded by actress Jessica Alba in 2011, could fetch $1 billion.
"What Jessica and her co-founders did is amazing with that business," he said, adding they've been aided by today's smarter, more discerning consumer. "There's never been a better time to be an entrepreneur."
Prior to CAVU, Thomas, a moneyman by trade, invested in consumer start-ups and also worked at a New York City hedge fund.
The third founder, Oza, came to the table with a resume of building Glaceau's Vitaminwater and Smartwater into powerhouses, using partnerships with entertainers 50 Cent and Jennifer Aniston, and professional athletes Kobe Bryant and Tom Brady.
When Coke purchased Glaceau for $4 billion in 2007, Oza was appointed chief marketing officer across all of the beverage giant's still brands.
"You'd think that a product can't be defensible because these big brands can throw enough money at it and knock it off. But you'd be amazed that these small companies, the focus they have on quality of product is pretty defensible," Christopher said.
"The big brands are dying a slow, profitable death. And psychologically, the two most risk averse people on the planet are Fortune 500 CEOs and first-year MBAs. They don't want to F it up," he added.