Frequently Asked Questions

What is the best way to approach BPV regarding an investment opportunity?

If you know someone who has a relationship with us, feel free to ask that person to make an introduction. If not, submit a summary description of your investment opportunity through our website. Allow us a week to review your material and then feel free to follow up with our team so we can begin a conversation. What topics should be included in a business plan submitted to BPV? A business plan doesn’t need to be lengthy, as long as it covers the key elements of the opportunity. We look for: • A detailed description of the business. • The unique factors of the operating model. • The market size and dynamics. • Information on the competitive landscape. • Since we invest first and foremost in people, detailed biographies on key members of the management team. • Historical and current financial profile of your company, including revenue and margins and reasonable projections for financial performance over the next three years. • How the company is capitalized and how much capital you want to raise.

How long is the process to receive funding?

It varies greatly. We prefer to meet entrepreneurs early in their companies’ life cycles and work to build relationships in advance of an investment that might be months or even years down the line. However, we can also move very quickly when an opportunity is ripe, moving from introduction through due diligence to closing in as little as sixty days. Who makes the final investment decisions? The Ballast Point Ventures Investment Committee, comprised of the three founding Partners of the firm, formally approves investments. However, we view investment decisions as a process, and we communicate openly both internally and with entrepreneurs as we move toward a decision. We have a consensus-driven culture that is a natural outgrowth of our team approach to investing, so we all participate in both due diligence and investment decisions as well as working with our portfolio companies after an investment is closed.

How BPV Invests

Is there a minimum revenue or profitability threshold before BPV will consider an investment?

There is no formal threshold or rule on revenue and profitability. Because we are a growth equity investor, we focus on investing in companies that have already proven the viability of their business model. This typically means the companies we consider partnering with have generated at least $2-$3 million in revenue (and more often $5-$30 million in revenue) in the twelve months prior to our investment and have often achieved some level of profitability at the operating level.

Does BPV have a geographic focus?

We focus our investments primarily in the Southeast and Texas, as we believe there is value in being closer to our portfolio companies. This is a region where we have built a network of valuable relationships over the last twenty years and have found our greatest success.

Does BPV prefer to invest in particular industries?

Strong, long-term key industry relationships have allowed us to invest in companies that represent a diverse group of industries and sectors. We have made a large number of investments in healthcare, communications (software and services) and business services organizations. Other industries we have expertise with include financial services and consumer/retail. We avoid real estate and energy (i.e. exploration, production or transmission), but we are always more concerned with the quality of the entrepreneurial team and the market opportunity than we are with the industry.

What is the typical investment size for BPV?

We look to invest $5-$10 million over the life of the investment, although our initial investment may be as small as $2-$3 million. We can also lead larger investments, as we have a number of Limited Partners and other co-investors who like to participate behind our lead as part of a comprehensive investment strategy.

How does BPV typically structure its investments?

We usually invest in a convertible preferred stock. Since we are often paying a higher price per share than previous investors, we invest in preferred stock to insure that our capital is paid back first in the unlikely event of a liquidation. Our intent is to convert our preferred stock to common stock at the time of an exit and participate in the equity value created at the Company over the life of the investment.

Does BPV prefer to be a lead investor? Will BPV co-invest with other firms or individuals?

We prefer to be the lead investor in a new financing, as we want to build a strong relationship with our entrepreneur partners; our team invests not only capital but also experience and network to bear on behalf of our portfolio companies. But, as part of a long-term strategy, we may invite certain institutional or individual co-investors into an investment, and will consider co-investing behind another qualified investor’s lead if the situation is right and we are comfortable with the lead investor.

What percentage of a company does BPV buy?

As growth equity investors, we seek to partner with great entrepreneurs rather than obtain majority control and have the management team work for us. Our percentage ownership depends on a number of factors, including the amount of our investment and the size and valuation of the Company at the time of investment. Our average ownership position is approximately 10%-35%.

What is BPV’s typical holding period for an investment?

Three to five years is a typical holding period. Attractive exit opportunities sometimes come earlier than we or our partners expect, but we invest for long-term value creation; we are also comfortable with holding periods that extend beyond five years when appropriate.

What is BPV’s preferred exit route from an investment?

We don’t have a preferred method of exit. Historically, most of our portfolio companies have been acquired by larger strategic buyers but a significant percentage have also undertaken public offerings. On occasion, we have exited through a sale to a financial buyer or a recapitalization if we have been investors for a long time and the entrepreneur wants to continue to build the company with a new partner. Will BPV provide capital for shareholder liquidity in addition to growth capital? Most of the time our capital is deployed to grow the business, but we are also willing to purchase the position of a selling shareholder who would like to exit the business. We also consider purchasing part of an entrepreneur’s ownership stake if the entrepreneur would like some liquidity but also wants to maintain majority control and continue to run the company.

Working with BPV

What is BPV’s level of involvement with its portfolio companies?

We act as partners rather than another layer of management. We are active members of our companies’ Board of Directors and bring our experience, expertise and network to work on behalf of our portfolio companies. In addition to attending board meetings, we build strong relationships with our entrepreneurs through informal conversations and get-togethers. During some periods, we may have more frequent communication if there is particular opportunity or challenge where we can be helpful. We understand that all private growth companies are extremely dynamic and we commit our resources to our entrepreneur partners when they need us most.

Who will I interface with if I partner with BPV?

One of our senior investment professionals will be on your Board of Directors and serve as your primary point of contact with BPV. However, we encourage our entrepreneurs to get to know the entire BPV team. Each of our professionals will be knowledgeable about your company and think proactively about how we can help you build your business. As part of the BPV family you will also have the opportunity to build relationships with various members of our broader network, including numerous successful entrepreneurs, industry experts, research analysts, investment bankers and other service providers who can help you reach your business goals.

Other

How is the firm structured, and how does BPV make money as a firm?

We are structured as a ten year Limited Partnership. Our Limited Partners commit capital to fund new investments over the first six years of the Partnership. We both manage and serve as a General Partner to the Fund and are entitled to a percentage of the profits we generate for our Limited Partners from our investments.

Whose money does BPV invest?

We manage money on behalf of over a hundred Limited Partners, including both institutional investors and high net-worth individuals. Many of our individual partners are highly successful entrepreneurs who have built private companies and either sold them or taken them public. They themselves have created value in private growth companies and act as a valuable resource for our entrepreneur partners. One of our larger institutional Limited Partners is Raymond James Financial, the largest independent financial services company in the Southeast. We also have a substantial amount of our own money invested alongside our partners.

What is BPV’s relationship with Raymond James Financial?

BPV is independently owned and operated, but we have a strong joint venture relationship with Raymond James Financial (“RJF”). RJF was an investor in our predecessor funds at South Atlantic Ventures and helped us start BPV in 2002. Tom James (Chairman and CEO), Jeff Trocin (Head of Equity Capital Markets) and Bob Anastasi (Head of Equity Research) serve on our RJF Advisory Group, providing advice and counsel in our investment efforts. They also help to insure that we leverage all the resources of RJF both in our due diligence process and on behalf of our portfolio companies. There are over 75 Raymond James senior executives, investment bankers and industry research analysts who invest with us through a side fund alongside our main Funds.