IVCA Feature: New Member Profile of May River Capital

IVCA Feature: New Member Profile of May River Capital

June 6, 2018

The Illinois Venture Capital Association keeps expanding, as the VC/PE community expands. The IVCA is committed, with each new member, to provide opportunities for networking, support and the nurturing of new ideas for the Venture Capital, Private Equity and their satellite industries. One such new member is May River Capital, a Chicago-based Private Equity firm focused on small and high caliber industrial grown businesses, that have the potential to be transformed into larger and more valuable enterprises

The following is a Q&A profile with May River Capital, which explores the firm’s background and their expectations for interacting with the IVCA.
 
New Member: May River Capital
Representative: Chip Grace, Partner
 
IVCA: What is a brief history and background of the May River Capital?
 
May River Capital: My partners, Dan [Barlow] and Steve [Griesemer] and I started May River in early 2012. We come from long careers in M&A and Private Equity at well-respected firms and decided to finally act upon our entrepreneurial inclinations.  The three of us and our families have been close personal friends for over 15 years, and that’s really the bond that cemented our business partnership six years ago. 
 
From 2012 to 2016, we invested in seven industrial growth companies through four discreet platforms, all as an independent sponsor with the support of some terrific family offices and junior capital funds. We then raised our first institutional fund of $170 million in March of 2017 and have made two platform investments in the fund over the past nine months.  Our focus from day one has been on lower middle-market, industrial growth companies – that’s all we do.  More specifically, we target high value manufacturing and engineered products, in addition to specialty industrial service and distribution businesses, generally in the $3 million to $10 million EBITDA range. 
 
IVCA: Why did the firm decide to join the Illinois Venture Capital Association?
 
May River Capital: Part of the maturation of our firm has involved becoming more active and visible participants in our business community.  Joining the IVCA was an appropriate step to that end.  The Chicago Private Equity and Venture Capital community has always been like-minded, collegial and supportive, and we think the IVCA stands at the center of that community, helping to further our collective interests and objectives. 
 
IVCA: You talk about pride on your website in ‘partnership and collaboration’ with the human element in business. What do you think is most evident in our human ambition that makes us want to achieve great things, or grow great companies?
 
May River Capital: That’s a good question, and a loaded one. We have a firm motto, which is ‘Do the right thing, everyday.’ If you ever come visit us, that affirmation is literally hanging in a framed poster in the middle of our office. ‘Do the right thing, everyday’ may sound a bit corny or just words on a page, but to us it really has a holistic meaning. It guides our actions and decisions with respect to each other, our portfolio companies, executive teams, employees, investors, financing partners, professional service providers…every one of our key constituents.  If we keep that maxim at top of mind, every day, we believe strongly that success will follow.   
 
IVCA: The backbone of the American economy in the 20th Century was home grown, large scale industry. In the 21st Century, you speak of smaller and more high caliber ‘industrial growth’ companies. How can America be an industrial growth country again, and what should be the focus in that growth?
 
May River Capital: We’ve certainly lost a good chunk of our manufacturing base to lower cost labor countries over the past 20-30 years.  That said, the businesses that we invest in are typically not high volume manufacturers, which were among the first pockets of manufacturing capacity to go overseas – for example, consumer electronics.  Most manufacturing companies that interest us weren’t as susceptible to offshoring as they typically have low-volume and high-mix production parameters. 
 
Our companies typically produce products  – or provide services – that have high engineering content, product design/IP, specialized manufacturing techniques and processes. These products are typically utilized in mission critical applications, all of which adds further barriers to competition. I think the biggest challenge that we’re seeing, in terms of constraints on U.S. industrial growth, is access to trained and capable labor, particularly for more skilled manufacturing positions.  This is a common, recurring issue within our portfolio and we hear the same from nearly every company we visit.  I think increased adoption of factory automation and IoT will only add to this skilled labor gap over the next decade.   
 
IVCA: The companies in your portfolio are the ‘nuts and bolts’ of our current tech age. What does the investment community, and your firm, need to understand about those nuts and bolts to advance and collaborate with tech in the industrial category?
 
May River Capital: We’re spending a lot of time within our portfolio, as well as with new investment opportunities, determining ways that ‘Industry 4.0,’ ‘IoT,’ ‘M2M/ additive manufacturing’ – pick your buzz phrase – can be utilized to improve the performance and value of industrial products and services. We believe we’re in the early innings of this transformation but it’s going to be a huge opportunity, as well as a competitive risk, over the next 5-10 years.  So much so that we’re considering tasking a member of our Executive Resource Group to be our Industry 4.0 champion and subject matter expert later this year. 
 
IVCA: What does May River Capital hope to achieve in their interaction with the VC/PE community within the IVCA?
 
May River Capital: As I mentioned above, we believe becoming more active members of the VC/PE community in Chicago can only help our business. We’ve always been pay-it-forward type people, and we hope that we can be helpful to other members of IVCA and that they’ll reciprocate in turn.    
 
For more information on the May River Capital, go to www.MayRiverCapital.com