Chaifetz Group of Chicago looks to keep investments close to home

Chaifetz Group is based in Chicago, on one of the seven floors in NBC Tower claimed by ComPsych, the employee-assistance-program provider founded by Richard Chaifetz and the source of the wealth this multibillion-dollar single-family office has managed and invested since it was founded in 2010.

Ross Chaifetz, Richard’s son and director of venture capital at Chaifetz Group, seeks to put his family’s wealth to work, often looking to bring their experience with ComPsych to bear.

“We are very proactive in … our outreach,” Ross Chaifetz told Buyouts. “We have a unique value proposition in that we’re not traditional venture capital investors. We have operational expertise and business-founding and -building expertise. … [In] reaching out to companies who are either in the process of raising dollars or who are just raising dollars, they like what we bring.”

Like a number of firms interested in VC, Chaifetz likes to keep its money close to home: Chicago and the Midwest at large, including St. Louis, Kansas City, and emerging VC scenes like Indianapolis and Nashville.

“We find the opportunity is greater in the Midwest than the opportunity on the coasts,” Chaifetz said. “While you might consider Silicon Valley, New York and Boston hubs for innovation, they’re so overflooded with dollars [that] we have a very tough time finding value.”

The group will write checks as small as $200,000, up to $5 million to $10 million for later-stage funding rounds. It’s staffed by a “lean and mean” six-member team, Chaifetz says.

Chaifetz recently took part in the Series B for BacklotCars of Kansas City.

“We like to track companies who have previously announced deals in that Series A or Series B stage,” Chaifetz says. “We like to track their metrics and sort of get ahead of the curve when they go out for a larger Series C or Series D round. We find that preempting these deals leads to a very high success rate.”

Ross Chaifetz also touted Chaifetz Group’s recent investments in tech firms. They include 15Five, the San Francisco performance-management-software program; Cargo, which provides hardware for ride-share drivers to sell food and other items to their passengers, and Chicago-based Fooda, which facilitates pop-up restaurants at office buildings for company employees.

Chaifetz Group is interested mostly in direct investments but does take part in funds, including “some of the larger funds that you recognize across Wall Street,” Chaifetz said.

But the firm always has a eye toward how to get more involved.

“We’ve found that by partnering with reputable private equity and venture capital firms that provide industry-leading returns, we can minimize risk, generate a return for ourselves, and also get exposure to deals that we may be interested in doubling down on or investing directly into ourselves,” he said.

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