Private Equity Firm Raises $50M in Oversubscribed Round

Artemis market landscape analysis and investor research lead to an oversubscribed funding round and successful acquisitions

About the Client

The client is a private equity firm that invests in micro-cap companies based in the western US. The fund had typically focused on a specific niche, but was coming across attractive opportunities outside that area.

Goals

The fund manager needed a confidential investor memo to catalyze conversations with prospective limited partners, including the thorough market landscape analysis that sophisticated investors expect. 

In addition, a prospective portfolio company had expressed interest in being acquired. The company operated in an industry that the fund manager wasn’t well-versed in, so he needed expert assistance to understand the landscape, the players, the customer experience, and the key risks for that type of business.

Challenges

The manager wanted to get up to speed on the market and the target quickly, but time was his most precious resource. He was actively involved with the companies his fund owned, so when new opportunities arose, he didn’t always have time to get everything done.

Solution

Although the manager considered performing the market landscape analysis and acquisition due diligence himself, he knew that he lacked the time to fit it in given his other commitments. 

With this in mind, he decided to look for an outside firm to augment his internal capabilities, but couldn’t afford—and wasn’t interested in—brand name consulting firms. And he didn’t trust regional firms to provide a cost-effective, top-tier product. 

He trusted the Artemis team, having worked with the firm before on market landscape assessments, confidential investor memos, and strategic reports on key risks and potential mitigations.

He selected Artemis to provide a rigorous market landscape analysis and documentation for targeted investor outreach, and was confident that the output would be exactly what he needed. 

Additionally, Artemis was willing to meet directly with the portfolio company to facilitate a collaborative due diligence process.

Results

The two projects took four weeks each. Deliverables included a slide deck on the market landscape for the prospective portfolio company, along with a list of target investors and a confidential investment memorandum for an affiliate that owns a portfolio of home services business. 

The memo led to a spectacular return: a 125% increase in the prospective investor pipeline and a final raise of $50M, which exceeded the manager’s fundraising goal by 50%. In turn, he reached his five-year goal for capital deployment in 18 months. 

Moreover, while Artemis recommended that the fund not invest in the potential target that was outside their focus area, the new funding that resulted from Artemis’s memo enabled the firm to acquire several high-quality companies.

In addition to being a significant stress reliever, Artemis provided the manager with the strategic guidance to quickly assess a new market and its attendant risks, as well as the materials to engage with the right investors for the fund.  

The manager continues to use Artemis for project-based and strategic planning for both the private equity firm and the affiliated holding company. 

"Artemis acts with the entrepreneurial spirit and can-do attitude of a small business. They’re responsive, thoughtful, cost-effective, and deliver excellent results. Using an outside consultant can be scary because no one cares as much as you do, but they have delivered beyond my expectation and I think they’re worth the investment."