Working The Private Equity Circuit

Are you a prime candidate for venture capital or other private investment backing? Here's how to get in the game.

you and your business for five or more years. That person is going to commit time, his or her most valuable asset, only if there’s a strong likelihood of a good return. Matching entrepreneurs with venture capitalists is almost a mating process,” he adds. “You should take the time to seek out venture capitalists with whom you can have solid personal relationships.”

“We like to work with investors who share our perspective,” says Christophe. “We don’t want to run your company but we do expect to take an active role in providing advice and acting as a sounding board. If we’re going to make this type of commitment, we expect our partners to do everything they can to make the business profitable. No matter what’s in a document, at the end of the day it’s trust between the parties that counts.”

“Your business plan is the first introduction to a private equity company, so it should be a good one,” says J. Peter Thompson, managing partner at Opportunity Capital Partners. “A well thought-out, well-prepared plan is a good indication that the person bringing us the plan is someone we can work with.” (For more on writing a plan, see “Doing an Effective Business Plan,” Enterprise, October 1997 through April 1998 issues.)

Thompson’s partner Anita Stephens, principal at Opportunity Capital Partners, notes that most successful venture capital proposals come through intermediaries–so it pays to network: “Ask an investment banker you respect for leads,” she suggests.

“Expertise and experience are critical,” says JoAnn H. Price, partner at Fairview Capital Partners. “Private equity companies want to see a history of success in your background. That makes it more likely you’ll succeed in the future.”

“Don’t wait too long,” says Divakar Kamath, managing director at Pacesetter Growth Fund in Dallas, a $46.5 million private equity partnership providing growth capital for minority-owned firms in manufacturing, telecommunications, food distribution and processors, broadcasting and electronics. “A lot of times, entrepreneurs look for funds when it’s too late. Instead, you should do your homework and find out which venture capitalists specialize in your region or your industry. Get to know them so you’re ready when an opportunity arises.”

The key piece of advice that links it all together? A good deal of preparation can prevent you from taking a pounding when you go out in search of private equity. In other words, what you know can determine what you get. Happy hunting.

13.9

PRIVATE EQUITY COMMITMENTS IN THE U.S.

Numbers in billions

1990 8.1
1991 8.3
1992 11.2
1993
1994 23.8
1995 29.8
1996 38.1
1997 54.6
1998 38.2
* Through 6/98

Source: The Private Equity Analyst, Asset Alternatives Inc., Wellesley, Massachusetts, 1998

SEARCHING FOR PRIVATE. EQUITY

Start by tapping your own network: ask for leads from the bankers, accountants and attorneys and so on with whom you’ve developed relationships. You can also contact the following firms, which are known for backing minority enterprises:

Black Enterprise/Greenwich Street Corporate Growth Partners 388 Greenwich St. New York, NY 10013 212-816-1308

Newly formed this year, this fund plans to provide expansion and acquisition financing to experienced enterpreneurs in diverse industries. (no start-ups). Generally companies need $10-100 million in

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