11 Big Things: A Female Founder Takes on PE’s Patriarchs

Written by Kevin Dowd for Pitchbook's Weekend Pitch newsletter

More than 1,600 private equity firms have been active in the US so far this year, according to PitchBook data. A mere 7% were either founded or co-founded by women. Just like a recent plunge in quarterly venture funding raised by female founders, it’s a sign of the challenges many women face in establishing a foothold in the still-patriarchal world of the private markets.

Suzanne Yoon knows those challenges all too well. The managing partner at Kinzie Capital Partners, a Chicago-based investor active in the lower middle market, Yoon is one of the several dozen women in the US leading her own firm. And in the process, she’s working to prove the importance of diversity and inclusion in building a successful business—”not for the sake of being diverse and inclusive,” she says, “but for the sake of commerce.”

I recently caught up with Yoon—over Zoom, of course—to discuss her career, her firm, and her ideas about the power of diversity. That’s one of 11 things you need to know from the past week:

1. Dealmaking diversity

While she was coming up the ranks in stops at Versa Capital Management, CIT Group and other firms, Yoon had a case of déjà vu. On multiple occasions, she would enter a room for a meeting. And she would be ignored.

“I might have even been the most senior person in the room, and they would talk immediately to my male colleague who was maybe junior to me,” she said. “People either assumed I was the secretary or the junior investment professional.”

But as she’s done repeatedly in her ascent through the industry, Yoon tried to turn an obstacle into an opportunity. The way she figures it, if others wanted to underestimate her, it would be all the more impressive when she proved them wrong.

“You can only go up from there,” she said with a laugh. “So I really try to think about, even in scenarios like that, what’s the opportunity to change someone’s mind? To make them think twice, right? Sometimes, that scenario has given me the upper hand.”

After nearly two decades in the industry, Yoon decided in 2017 to branch out and form Kinzie alongside co-founder David Namkung—a move she described as “the scariest thing I’ve ever done.” Yoon saw an opportunity for an investment thesis centered on bringing operational expertise to lower-middle-market companies, particularly those undergoing generational shifts. Another motivation was the chance to build a team where diversity is a core value.

A perfect test case for her ideas emerged last November, when Kinzie made its first acquisition: Colony Display, a manufacturer of custom fixtures and displays. When Kinzie bought Colony, Yoon said that 70% of the company’s employees were Latinx, and 52% were female. But there were no women or people of color in its executive management team. To help shrink that gap, Kinzie promptly brought on new recruiters and Spanish-speaking HR managers and set out to reshape the company’s leadership.

“We have now two women, one of color, in the executive management team, and then we also have a Latino executive as well,” Yoon said. “And we’re already seeing stellar performance out of the company: They doubled EBITDA within the last 12 months. The numbers don’t lie.”

The way Yoon sees things, it’s simply common sense. Neither companies nor investors are doing themselves any favors with leadership teams where everyone looks and thinks the same. She sees creativity and new ideas as a natural result of bringing together smart people from different backgrounds.

“When you have groupthink, it’s very hard to think outside the box of investing,” she said. “The United States and the world [are] diverse. The consumer is diverse. And everything at the end of the day is driven by the consumer and the labor market. So if you have a diverse labor force and you have a diverse consumer base, then you need to have diverse investors.”

Yoon also knows the stakes are high—too high to base investment decisions on anything besides what she thinks will produce the best results. As Kinzie has expanded its portfolio (the firm made its second acquisition in September, snapping up Chelsea Lighting), the cutthroat world of private equity will put her ideas to the ultimate test: What will LPs think?

“Whether you’re a man, a woman, you’re Caucasian, you’re a minority, it doesn’t matter. It’s really hard,” Yoon said. “It’s incredibly competitive, and if you want to be in the game, you’ve got to show up every day, 100%. I think about that all the time. If you don’t treat your investors’ dollars like they’re your last dollars every time, someone else will.”

For Yoon, the days of being ignored in the board room may be over. But she said she’s cognizant that women are still overlooked in much of the industry. For those making up 50% of the population, 7% of all private equity firms is an awfully low rate.

“Now that I’ve been in this role, and the questions that I get, and the young women that approach me and are inspired—it certainly has elevated the feeling of responsibility that I have to women and minorities in the industry to do well,” Yoon said. “I’ve never wanted to lose to a boy, my whole life. I think I felt that with my cousins when I was five.

“So no, I don’t want to lose. But I think more so now, it’s so important. There are very few women and minorities [in private equity], so the success of Kinzie I think is hopefully going to inspire people to go out on their own and take some risk.”

Full article found here.