Charlotte, N.C.-based Frontier Capital, a private-equity investor, is stepping-up its scouting of Middle Tennessee opportunities.
Frontier's deal-flow developer, Seth Harward, told VNC yesterday he is exploring the Nashville region for private-equity investmen opportunities. Frontier has a dozen active portfolio companies, including two with operations in Middle Tennessee.
Frontier's two funds have had more than $130 million in assets under management. The first fund was a small-business investment company (SBIC) that supported 16 investments, and has produced seven exits, thus far.
Harward said Frontier's $115 million second fund is "about half deployed," and the company is looking to do as many as eight more deals, with a strong focus on "software-enabled or tech-enabled business services."
Frontier's portfolio currently features a dozen companies, and Harward said two more termsheets are on the table, now.
According to Harward, most of Frontier's portfolio companies "have bootstrapped themselves or they've had good angel investors that have helped them get to a point where they've got good traction, but they need some institutional capital to come in."
Harward said attractive companies for Frontier are typically generating $5 to $30 million in sales, and are either breakeven or producing up to about $3 million in earnings (EBITDA). He said he believes Frontier's readiness to write sizeable checks for non-controlling interest, plus its intense focus on software-and tech-enabled businesses, set it apart from competing private-equity firms.
In its transactions, Frontier commonly writes checks ranging from $5 million to $30 million. Harward said the rounds are usually to help a company that has "gotten stuck" and needs outside capital to fund growth, whether through acquisitions, salesforce expansion or to by improving performance by offloading duties from a multi-tasking CEO-founder. Also, Harward said Frontier's investments often provide a liquidity event for Angels and other early investors.
Locally, Frontier owns a stake in Franklin-based Conclusive Marketing, which provides marketing technology to the automotive, financial, healthcare and agricultural sectors. Conclusive includes the former MailNet Services Inc.
Another Frontier portfolio company, North Carolina-based Peak 10 Inc., has a presence in Middle Tennessee, a result of having bought RenTech, a managed-services and data-center provider.
Prior to joining Frontier roughly nine months ago, 30-year-old Harward was director of business development for the Center for Entrepreneurial Development, which cultivates high-growth companies in the Research Triangle Park area.
Prior to that, he worked in marketing and recruiting for Bandwidth.com and Aerotek.
He earned his bachelor's in communications at the University of North Carolina at Chapel Hill, in 2000. ♦