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Why Evolution Partners With Second Stage Companies

When we began working on the principles that would ultimately become the driving force behind our decision-making at Evolution Capital Partners, we not only relied on tips from proven experts in the area of smart investing, but we also leaned heavily on our own experiences as entrepreneurs.

From the beginning, our interests lied in growth; yet this has not only been applied to the small businesses we invest in, but also in the personal and professional growth of the leaders we invest in as well. And this is why we choose second stage companies as our primary focus, knowing both the company and leadership are primed for evolution, and prepared for the boost that Evolutionary Capital provides.

What We Look For in a Partner Company

While we’ve concentrated on only working with second stage companies at Evolution Capital Partners, the criteria we use in selecting a company to partner with has been the secret behind our success as small business investors. We realize not every small business is ready for the transition beyond the second stage, but for those who fit this criteria, growth is certainly within sight.

When evaluating organizations with high-growth potential, our criteria for partnering with a small business and a business owner or leader consists of:

  • At least $500K of EBITDA on a TTM basis
  • Vision and plan to grow the business to at least $5M in EBITDA over the next 3-5 years
  • Willingness to hire a cohesive team
  • Prepared to give up board control (at least temporarily)
  • Desire to implement an operating process, creating a culture of transparency and accountability
  • Have goals of developing great financials and reporting processes
  • Committed to having a partner, not just an investor

It’s been our experience that these are an ideal starting point for a company to continue its progress, build a foundation for scale, and aligns seamlessly with our process, The 5 Pillars of Business FreedomSM.

Take a look at some of our partner company results, demonstrating just how effective the pairing of your vision with our pillars truly is.

Why Second Stage Companies Matter

Build a Foundation for Sustained GrowthAs we mentioned, choosing a second stage company means more to our team than making a sound investment. Even for those small businesses we don’t financially invest in, our passion is providing best practices from our own experiences as entrepreneurs and small business investors.

Evolution Capital Partners is only one cog in the machine that creates a successful economy. When one company suffers, multiple businesses and business owners can suffer as a result to some degree. But when one small business is successful, and navigates its way past the early stages of growth into a fully realized organization, both the local and national economy, as well as other entrepreneurs, reap the rewards.

Job growth, innovation and options for business owners – these are the reasons we believe so strongly in assisting second stage companies with extraordinary growth potential. If you have a small business that meets the above criteria with a vision for growth, or you’re a natural leader who’s currently employed at a company which similarly meets these criteria, contact us to find out what Evolutionary Capital can do for you.

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Posted by: Brendan Anderson A co-founder and managing partner at Evolution, Brendan has spent the past 20 years as an investor and manager of businesses ranging from manufacturing to financial services. @Brendan_Andersn

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