BlackPeak Capital On Growth: What is Growth Equity?
In the first episode, Rossen Ivanov, Managing Partner of BlackPeak Capital, explores in detail how growth equity works and how it fuels transformative business expansion and positive impact.
So, what is Growth Equity?
When we answer this question, we don't start with ‘We provide funding’, but rather ask the founder ‘What is your strategy and what's your ambitious goal…and what's your extra ambitions goal and extra, extra ambitions goal?’
When we find founders who have really big ambition to outjump themselves i.e. to jump higher than normal this is where growth equity comes. If this is your strategy, then growth equity and our skill set can help you get there.
Watch the full episode here:
We prefer minority stakes. You lead the business.
Very interesting to founders is that we prefer minority stakes. We want the founder to keep the majority and so they can be motivated and driven to essentially retain a lot of the value of their company. Our approach is ‘you lead the business, you're in charge’. We are investing in you, but we are there to support you with capital and expertise.
Growth equity isn’t buyout.
We are really a partner for our portfolio companies and that is the core of growth equity, which is very different than the traditional buyout model, where a fund will come on a majority and often try to call the shots, which sometimes leads also to conflicts, change of management, etc. So, growth equity means that you are in control of how you can go further and faster and how we can help you in that.
Bridging the funding gap in Southeast Europe for investments between EUR 5-15m
We are trying to bridge a big funding gap in Southeast European. That was one of the reasons why we created the Fund, and we were successful in fundraising.
We invest in tickets in the range EUR 5-15m. In the region, there are quite a lot of venture funds covering EUR 0-3m primarily in the IT space. For deals about 15 million, there are quite a few buyout funds which are not regional, but they cover the region out of Poland, out of London, out of Germany and they do majority deals. In the 5-15 minority ticket space, there is almost no one in the region. There are a few country-specific funds, and they can do both minority and majority but there's no one really covering the whole region. So, we are uniquely positioned from that perspective to bridge the gap both in terms of size but also in geography covering Romania, Bulgaria, Serbia, Croatia and Slovenia.
We measure impact on a number of levels.
One method is very numerical how much we invest, which is the simplest and most straightforward. But then around it we measure what other economic effect we generate - how many new jobs are generated, how many new factories are built. For example, what additional revenue is generated and exports from our companies.
Because we are not solely focused on IT, a lot of our investments are happening outside the capital cities. That is the direct financial impact we have. Also, our investments have a very strong demonstration effect because we create local champions. There are great growth companies not just in the IT sector and we would like to showcase them to the world.
Stay tuned for the next episodes and join us as we unravel the principles that underpin Growth Equity's success, and gain insights into its pivotal role in shaping the future of investments.