Investing More Than Just Money: How Private Equity Firms Add Value

You’ve successfully acquired investment funds from a private equity firm – now what? Wrapping up our three-part series, we talk to private equity leaders about how they continue to add value to brands after their initial investment.

To learn more, check out our two other posts in the series: “How to be attractive to investors? Focus on Talent” and “Private equity firms want to know: What are your values?

How do you apply your resources to help the portfolio company grow?

Scott Donohue, Partner, NextWorld Evergreen
Scott Donohue is a partner with NextWorld Evergreen. Prior to joining NextWorld, Scott was COO of MVP Capital, an investment bank focused on the TMT and renewable energy sectors. His earlier experience was as the founder and CEO of five venture-backed companies in the wireless and media sectors. Additionally, Scott served on the senior leadership team at Year Up, a nationally recognized social enterprise focused on training young adults for jobs with leading companies in the U.S.

“We remind ourselves that our work begins once the investment is made – the equity value creation process is why we make our investment in the first place. We always want to align our interests with leadership so that we have the same sense of ownership, a bias to action, and a focus on the same fundamental contributors to success. We are always involved on boards, where we can listen thoughtfully, engage with inquiry when we think there might be opportunity or underperformance, and bring additional resources to bear when needed.

We always seek to leverage knowledge across our portfolio companies, whether it is by putting leaders in direct contact with one another, or whether it is sharing work done for one company with another. This can be as basic as sharing common documents like employment agreements and NDAs, or more complex endeavors like an equity compensation framework. Our fundamental goal is to help the management team focus on the big levers they can use to reach our shared goals, by creating some efficiency around the projects that are necessary for the business. We also believe in working on behalf of our companies in our external engagements as investors, whether that means identifying complementary acquisition opportunities, or connecting our companies to customers.”

Wayne Wu, Managing Director, VMG
Wayne Wu is a managing director and partner at VMG. He and the VMG team are excited to partner with the next generation of innovative, consumer product entrepreneurs, helping them to fully realize their founding vision to build iconic brands.

“The biggest piece is growing a brand. For VMG, our focus is investing in branded consumable product companies that are founder-led or have high founder involvement. As a result, a lot of time growing emerging brands can be lonely at the top. It is beneficial, with any growing venture, to have a sounding board and to have someone to bounce ideas off of, helping founders achieve their dreams with the most minimal friction along the way as possible.

Through our 10+ year history in this space, we have tried a lot of different things. What we can do is be a quarterback of the “VMG toolbox” and work with the management team at the brand to understand what aspects of the toolbox are applicable to their needs versus taking a one-size-fits-all approach. They might need key hires, so we bring in our VP of Talent. If they have legal issues, we will provide inside counsel. It could be brand issues or rebuilding their supply chain with contract manufacturer relationships. Their needs can range from the front-end to back-end and from strategic to nitty gritty. We apply our resourced by being an experienced partner to identify the pieces that can support them.”

Gregg Bagni, Partner, White Road Investments
Gregg Bagni is a brand, marketing, product geek with a street PHD and deep knowledge around what he likes to call “enthusiast brands.”

“This is a big piece of what we do, and it can be in any or all ways needed. For example, we recently conducted a two-day offsite with a new investment of ours to help them dial in their mission, values and vision. We do this ourselves vs. hiring a facilitator. In this case, we also built a pretty spot-on brand platform for future growth.

In another cases, we use consumer insights data to find the optimum retail and promo price points for a brand. Or we drill into the Sales dept firm, shoring up internal staff, broker networks and buyer relationships. In the past, we’ve placed a temporary CFO to get the financials dialed and prepare for a round of fundraising. The support is customized to the needs of the business at a given point in time.”

About the firms

NextWorld Evergreen is a San Francisco-based investment firm focused on providing growth capital to the consumer sector, with a commitment to the natural products category particularly in the areas of beauty, food, and beverage. The firm operates from a unique structure with $400mm of evergreen growth equity. They are committed to building durable brands, and align with entrepreneurs who value a long-term strategic perspective. Examples of NextWorld’s current and past investments include Steven Smith Teamaker, Alter Eco Foods, Peet’s Coffee and Tea, and Credo Beauty.

VMG works intimately with founders and leaders of branded consumer product companies, providing the resources and guidance needed to propel them to their next level of growth and value. Beyond capital, VMG’s value-added investment philosophy commits our deep experience, strategic guidance and passionate focus to help their partners accelerate growth, brand awareness and achieve their own definition of success. VMG has worked closely and successfully with brands such as Ancient Nutrition, Babyganics, Drunk Elephant, Humm Kombucha, Justin’s, KIND, Nature’s Bakery, Perfect Bar, Pirate’s Booty, Pretzel Crisps, Quest, Spindrift, Stone, SunBum, and Vega to name a few.

White Road Investments funds brands with a mission, like The Honest Kitchen and Herb Pharm. With Clifbar as the mothership, they strive to identify and invest in the best emerging, values-driven businesses. Their focus is on partners that continue to innovate consumer products and promote the lifestyle of health and sustainability–for people and planet.