Driehaus Private Equity invests exclusively with founders. We choose to work with founders because of the passion they exhibit for their customers and employees, and because they have the ability to evolve, pivot and capture growth opportunities as they identify them. The founders we collaborate with are dynamic, open-minded and focused on creating wealth through a customer-centric approach. Having bootstrapped their company, which is often their most valuable personal financial asset, founders also appreciate the scarcity and limitations of capital. For example, they recognize the importance of investing in profitable opportunities or growth vectors. They’re accustomed to assessing investments in their business thoroughly and with an eye toward generating value, whether it’s a new hire or a new piece of equipment.
Founders also have an intimate knowledge of their company, market, and industry that is hard-earned through direct experience. They have built their companies by fulfilling customer requirements better than their competitors, and the ongoing viability of their enterprise is dependent on their deep and nuanced understanding of its operations and financials.
However, while many founders know their company and industry, they don’t often understand the world of private equity, including the various types of private equity investors that exist, their operating styles, and most importantly, how to evaluate them as potential investors. This is understandable given their lack of exposure to private equity groups. It can be confusing and even mind-numbing when trying to sort through the onslaught of calls founders receive from bankers, brokers, fundless sponsors and private equity groups. I know this from my own experiences. During my introductory call with Curt Rutsky, the founder of Syntac Coated Products, he said, “I know private equity; you all want to take control of my company and want to finance it.” Sure, that’s what other groups wanted to do, but that wasn’t our approach. I responded, “I want to ride your coattails and incentivize you to build a more valuable company with our support.” It worked, and after a few years of executing our collective plan to evolve Syntac Coated Products, we delivered on that promise.
Oftentimes, founders are too guarded in their conversations with potential investors and they don’t utilize the opportunity to ask the tough questions or articulate what is truly important to them. To overcome this obstacle, we begin every introductory meeting with a founder by reviewing the questions we’ve been asked by founders in the past – because our process begins and ends with a focus on their motivations, their company, and their aspirations. As a private equity firm looking to invest in scenarios where the founder seeks to maintain a leadership role and meaningful ownership interest, we seek to support them in continuing to evolve the company, capture growth opportunities and overcome business challenges. Beyond capital, we invest the time to cultivate an authentic relationship by answering the founder’s questions and helping them identify their desired business outcomes and top priorities.