Written for Emerging Manager Monthly
Like the view of the Loop neighborhood from its namesake bridge in Chicago, private equity firm Kinzie Capital Partners has had the goal of “constantly ever changing” since its inception in 2017.
“I wanted a name that was not necessarily tied to any one of us in the context of building a firm that would outlast the founders,” said Founder and Managing Partner Suzanne Yoon.
When the opportunity to invest in the lower middle market buyout space came up four years ago, the Chicago-based firm, which recently hit approximately $150 million in assets under management, was born.
The firm, whose strategy focus lies mostly in the U.S. due to its active management style in wanting access to portfolio companies that it identifies, is geared specifically toward the manufacturing, consumer and business services industries, according to Yoon, who thinks a good deal about technology.
“We’re identifying companies that were showing innovation and growth within their space or really didn’t have the resources or know how to implement the technologies that they needed to accelerate growth and value creation within their own company,” she said.
Kinzie seeks out companies that sport a unique product differentiator and strong management teams within industries with which the firm is well acquainted.
“They’re showing some level of innovation [and] our research is really the industry diligence that we do and then once we are exclusive, we do quite a bit of research every way we can through professional networks, actual data, working with different research firms, due diligence and all the way down to customers’ customers,” Yoon said.
“We may be a big customer of a retailer, but we would look at who that retailer’s customers are and where the trends are going,” she said, noting that the firm spends “a lot of time on consumer and demographic analysis, research and trends.”
Having experience with funds-of-funds and firms looking to diversify their manager base, Yoon has found that there are not a lot of women who lead their own firms in any asset class in the U.S., but she finds it even more unique in the buyout space.
“I have gotten a lot of inquiries because there are so few female-led buyout firms,” she said.
Yoon is proud of the collaborative culture that Kinzie built to promote open-mindedness in order to assess different thoughts and opinions from its employees.
“I think that does start from the top where there’s no fear of candid feedback and I think that proliferates into our investment committee. We always have very robust discussion,” she said.
Yoon wants to hear from everyone in the room, even if they are the most junior person.
“I generally feel like groupthink doesn’t really lead to innovation and that’s why we preach to our portfolio companies that innovation is what will continue to help you grow and we believe that can even be at the management company level,” she said.
Today, Kinzie has a team of 14 from various backgrounds and skillsets, all with traditional investing experience, which Yoon attributes to being in a diverse city like Chicago that provides access to “the best.”
“I think having that kind of access really brings us great talents. I love [my team], I think about them like family. All recognize that in order for us to succeed, we all have to play as a team. Everyone works very hard to be the best they can in their positions, and I think that shows in the early success of our firm,” she said.
Yoon’s vision that Kinzie is at a stage of growth with a great trajectory ahead is reflected in its addition of five team members in the last six months. She further indicated that the first fund is always a big risk in order to manage and build a longstanding company. With that, the partners did not take outside capital when they started the firm and fight every day as if it is their last dollar.
“I think all of our investors who came into the first fund know that and so we’ve had a lot of support and I think we will have continual support. We’re seeing a lot of interest in Kinzie because of our performance,” Yoon said.
The firm has had “great momentum” with five closed deals to date and Yoon expects that as the firm grows the number of deals will grow depending on the size of the fund and size of the team. She anticipates that Kinzie will do another six or seven deals over the next three to four years.
In the firm’s marketing efforts, Yoon is a believer that the best partners and limited partners are ones that Kinzie has really good relationships with and she has always taken the opportunity to get to know potential investors in advance when fundraising.
She also noted that the firm is constantly marketing but does not really differentiate between getting its name out there for deal flow, getting its name out there for hiring the best talent or getting its name out there for clients as Yoon thinks all of those feed into each other.
“When we think about marketing, you really think about it across various platforms. Everything from making sure that we’re an industry thought leader, that we are visible on social media, that we’re really thoughtful about our culture and being inclusive and then making sure that we’re staying in front of people that are really driving a business,” she said.
Original article found here.