Perhaps the last thing you’d expect from a group of accountants and economists is for them to form a people-oriented private equity firm. Throw in a founder with a degree in applied mathematics, and it’s not a stretch to think the group would spend its time huddled behind closed doors, crunching numbers. But for the folks at private equity firm Main Street Resources, it’s all about personal interaction.
“I consider money and private equity expertise to be commodities, so I tried to figure out what more Main Street can do to differentiate ourselves,” said Dan Levinson, who founded Main Street in 1998. “We want to provide more than just money, and we want to bring people in that are committed to developing the resources and personnel that add value to our investment process-and to the companies.”
Main Street is currently using its inaugural fund, MSR I SBIC LP, to finance deals. It is a $66 million vehicle, which includes $22 million from LP commitments and $44 million from SBA leverage commitments. To date, the firm has invested $17 million in six portfolio companies (see snapshot).
With plenty of dry powder left, Main Street allots a generous amount of time bringing its portfolio company CEOs together.
Levinson says his firm never forces the CEOs of his portfolio companies to interact, but lets them know that resources are available. “We are doing very innovative things, such as having CEOs of separate companies work together,” he said. “Because we’re small and regionally-based, we help our CEOs to get to know each other.”
The idea behind this is simple. “We offer our CEOs access to strong professionals, all within our portfolio and investor base. For example, if a CEO needs PR advice, strategic consulting, a systems expert, access to a potential customer, or a new CFO, our portfolio CEOs and investors jump in.”
Aside from acting as liaison between portfolio companies in need of specific services, the firm boasts a 90-person list of individual investors with backgrounds ranging from retired CEOs of manufacturing companies to surgeons to appointees on MIT’s senior research staff.
“For a normal private equity firm, managing 90 individual investors might seem like a nightmare, but to us it’s a gem,” said Levinson. “It’s a lot of work, but it’s who we are.”
Also unique, Main Street posts its investors on its Web site. “We’ve been doing this for a long time, it’s about trust,” said Levinson. “That way, we can be easily verified through third party means. Almost everyone running a midsize company in the Northeast will know at least a few of our investors.”
Main Street invests in companies from Maine to Maryland, preferring to stay regionally focused in an effort to allow easy access across the firm’s portfolio.
So to what does Levinson attribute his firm’s desire to be more than just a financial firm? “We approach the world through people,” he said. “We have a good mixture of business savvy, strong basic business and financial skills, but we look for people that are service and people-oriented. Our whole strategy is based on proper communications, and making sure our team is filled out with people who aren’t asking what’s in it for me?'”
Regarding this philosophy, the Main Street team pools its compensation (after investor payouts) and donates 10% of earnings to charity. “We do more than just giving money, we’re on the board, and we offer feedback and support.”