18VC Podcast Ep # 5 "You can't AI your way out of bad taste" — Diana Melencio (GP, XRC Ventures) on building the next $100M consumer brands

"You can't AI your way out of bad taste."Diana Melencio is the General Partner of XRC Ventures' Brand Capital Fund — a NYC-based seed-to-Series A consumer fund whose LPs include some of the largest public retailers, CPG companies, and global mall operators in the world. Before becoming a GP, Diana was a two-time consumer-tech founder (OK My Outfit and Quinn) and spent a decade in equity research and growth equity at Robertson Stephens, Morgan Keegan, and Cramer Rosenthal McGlynn — including time on a Financial Times-ranked #1 Specialty Retail team.In this episode, Diana joins Lucas and Philip from Paris to explain why consumer VC is the most contrarian bet in the market right now — and why her fund's diligence process looks more like growth equity and private equity than traditional venture.In this conversation, you'll hear:The difference between a good idea, a good business, and a venture-backable business — and why Diana now tells most consumer founders to skip VC entirelyWhy XRC "sets up the acquisition from the beginning" — and the Venn diagram method she uses to source brands, starting from Fortune 500 CFO conversationsHow XRC built a proprietary AI tool to track newly launched DTC brands via their Shopify checkout pages, and why she still believes consumer sourcing is fundamentally relationship-drivenThe two metrics that matter most in her diligence (hint: repeat purchase rate and price-per-fluid-ounce)What "taste" actually means in a founder — illustrated through the origin stories of two XRC portfolio companies: Homefield (built by a college student screen-printing vintage Indiana sports tees in his dorm) and Naked Sundays (founded by an Australian news correspondent who watched colleagues get skin cancer cut out of their faces)Why the post-Allbirds, post-Casper reality of consumer IPOs has reshaped how she investsDiana's honest answer on whether she'd found again — and the lengths she went to keep her first two startups alive (Christmas trees and Airbnb-ing her spare room included)If you're building, backing, or thinking about consumer brands in 2026, this conversation is worth 45 minutes of your week.CHAPTERS(00:00) Highlight reel(00:41) Welcome & introduction(01:36) From Wall Street to fashion: Robertson Stephens, the mentor who told her to leave, and finding 20,000 users in two months(06:17) Why fashion, and the virtual try-on problem she's still bearish on(09:13) Lessons from 2x founding: good idea vs. good business vs. venture-backable business(11:56) Navigating imposter syndrome as a GP(14:45) Inside XRC: two funds, one ecosystem, and the symbiotic deal flow between them(17:08) Biggest success vs. bitterest lesson — and the AI co-founder question(19:09) XRC's edge: C-suite relationships at strategics(21:16) Why consumer VC is the contrarian bet of 2026(23:42) AI in deal sourcing: XRC's proprietary brand-tracking tool(26:27) The diligence process: thematic, growth-equity-style, and built for strategic exit from day one(31:09) What "taste" means: the Homefield and Naked Sundays origin stories(36:42) What separates a high-potential consumer founder(39:33) The most common fundraising mistakes(41:43) Would she found again? "It was soul-crushing."(42:55) Where to follow Diana(43:35) The childhood dream and the path hereMore on XRC Ventures and Diana:XRC Ventures — https://www.xrcventures.comXRC careers (Silicon Valley intern role) — https://careers.xrcventures.com/companies/xrc-ventures-2/jobs/78500795-2026-analysts-part-time-interns#contentThe Brand Capital Report (Diana's Substack) — https://brandcapitalfund.substack.comDiana on LinkedIn — https://www.linkedin.com/in/dianamelencio/XRC Ventures on LinkedIn — https://www.linkedin.com/company/xrcventuresMore on 18VC & 18VC Podcast:18VC Website: https://www.18-vc.com/18VC Instagram: https://www.instagram.com/18venturecapital/18VC LinkedIn: https://www.linkedin.com/company/eighteenvc/18VC X: https://x.com/Official18VC