As covid continues to push people out of crowded indoor venues and into the great outdoors, Seawall Capital is doubling down on outdoor activities. The PE firm, headquartered in Austin, Texas, bought Kent Water Sports a year ago and announced on Wednesday that it has renamed the company Kent Outdoors and bought two add-ons: Bote, which makes paddle boards and kayaks; and Kona Bicycles, which makes bikes.
“We look to partner with brands and businesses that have a really strong connection to the consumer and have built that relationship through product excellence and leadership,” Matt Eby, founder of Seawall Capital and chairman of the board of Kent Outdoors, told PE Hub. “It is a simple formula, A+B=C, where A is the great product, B is customer loyalty or strong connection to the consumer and C is great consumer brand.”
Eby said the outdoor activity category represents a “vast opportunity.” The impact of covid on the category was significant in several ways. “For folks who were already outdoor enthusiasts, it reinforced those connections,” Eby said. Covid also brought in a “whole new cohort of enthusiasts.”
The new name reflects the company’s growth. “They were the market leader in the water sports category, and now we are branching out across the outdoor category,” Eby said. “Whether it be paddleboard, stand up paddle, inflatable stand up paddle, kayak and human powered watercraft, Bote was the first add-on opportunity. And now with Kona Bicycles, it takes us into an off-the-water category.”
For private equity firms, outdoor sports may be the gift that keeps on giving.
“Once people get into the outdoor world, it creates a cycle of replenishment and acquisition of products and gear that help enable you to get outdoors,” Eby explained. “Gear is very important in the outdoor world because, not only does it help you enjoy it and maximize your experience, but it also keeps you safe, and safety is everyone’s number one priority, especially in today’s world.”
The investment is not immune to the overall economic challenges facing the US today.
“The biggest challenges companies like ours are facing in the consumer product category are supply-chain challenges right now,” he said. “The demand side is very strong, so we intentionally have partnered with folks who have really strong relationships with their suppliers and have been able to successfully navigate these challenges by passing on the price increases, so we are hopeful we will be able to do that.”
Founded in 2020, Seawall was spun out of Tengram Capital, where the team worked together for over a decade. The mid-market firm focuses on investing in companies that have built strong connections to their end consumers. The firm’s investment strategy centers on partnering with founder-led businesses that deliver products and services that people love and trust. The firm invests on behalf of its leaders and partners and has not yet raised a fund.