#257 Co-Man Due Diligence 101 with Riot Energy and Kelley Drye & Warren LLP

In this episode of the Startup CPG Podcast, host Daniel Scharff sits down with Laura Jakobsen, founder of Riot Energy, and Daniella Carelli, Special Counsel at Kelley Drye & Warren LLP, for a deep dive into co-manufacturer due diligence — finding the right partner, evaluating them properly, and getting a solid contract in place before things go wrong.

Riot Energy has scaled from an early-stage beverage brand into nationwide distribution across Whole Foods, Costco, and convenience, all while pushing co-packers to produce a next-gen energy drink with no artificial sweeteners, no added sugar, and real ingredients. Laura brings the brand-side battle scars; Daniella brings nearly a decade of legal experience representing both brands and co-manufacturers, giving the conversation a rare view from both sides of the negotiating table.

Together they unpack what actually separates a good co-man relationship from a costly one — not just price per unit, but reporting transparency, yield loss tracking, IP protection, and the kind of contract flexibility that only shows up when you ask the right questions upfront.

Listen in as they discuss:

• Why the "partnership approach" matters more than price when evaluating a co-manufacturer
• The three reporting buckets every brand needs from day one: attainment, inventory, and shipping/receiving
• A real contract clause example — flavor-swap flexibility when ingredients don't show up on time
• How to protect trade secrets when a co-packer has full visibility into your recipe, including working with flavor houses to fragment the formula
• What to actually look for during a facility walkthrough, from hairnets to batch cards to QA culture
• Why founders should build their own baseline co-man agreement instead of just redlining the co-packer's template
• The case for flexible payment terms over the lowest per-unit price — and how that impacts cash flow
• Why yield loss tracking is one of the most overlooked (and costly) blind spots for early-stage brands
• When a PO-to-PO relationship is fine — and when it's time to invest in a formal long-form contract
• How to test whether a potential co-man will actually be a partner, not just a vendor, before you sign anything

Episode Links:

• Laura Jakobsen – Founder, Riot Energy: LinkedIn
• Riot Energy Website: https://riot.energy/ 
• Daniella Carelli – Special Counsel, Kelley Drye & Warren LLP: LinkedIn
• Kelley Drye & Warren LLP – Consumer Packaged Goods Practice: https://www.kelleydrye.com/industries/consumer-packaged-goods

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• Episode music by Super Fantastics