- Crown Predator does later-stage investments in growth stage companies and special situations
- Completed $28 mln financing of Establishment Labs in July 2016
- Crown sold AVP Pro Beach Volleyball Tour to AOS Group’s Donald Sun in 2012
Nick Lewin is founding partner of Crown Predator Holdings, the New York VC firm targeting later-stage investments in growth-stage companies and special situations. Sectors of focus include biotech/healthcare, energy, media, security, sports and technology.
What types of deals does Crown Predator look for?
We’re not doing startup stuff. We’re not doing ideas on napkins or minimally viable products. We’re doing something where you can look at a business and say, “These guys are doing something of value.” It doesn’t have to be profitable but just a question of what it could be worth. This is opposed to, “Wow, this looks really cool.” We’ve led 13 deals. We are currently managing five but have a fair number of passive investments in the portfolio. We generally make minority investments.
We have a senior secured convertible debt fund. We’re a family office more than anything else. We’ve been investing since 2000, but an incarnation of Crown Predator has been around since 2006. In September 2015, we led a single-purpose vehicle to invest in Establishment Labs, which is a breast-implant manufacturer. We have different iterations of this. We did single-purpose vehicles in 2014 and 2015. The last single-purpose vehicle raised $28 million in 2015.
What was your best deal?
Establishment Labs exemplifies our senior-secured strategy best. They essentially built a business to build a better breast implant. Complication rates for breast implants are 25 percent at five years, which means [they] have to be reoperated on at that time. These guys were showing data of 1 percent complication rates, which seems a lot better. They sold $100,000 of implants and were doing $6 million of revenue [when we invested].
What was your worst deal?
AVP Pro Beach Volleyball Tour. We exited in 2012; it was the worst deal we ever did because volleyball is a niche sport. We invested in 2008 when they were doing $27 million to $28 million of revenue. We bought 25 percent for $3.5 million. We next bought 75 percent for $800,000. They chopped their expense line by $10 million immediately. And they lost $16 million of revenue in four months. We didn’t recoup everything but we got 20 cents on the dollar. Given the situation, it was pretty good.
When we did AVP [in 2008], we learned you can’t have a sponsorship-based business in the sports industry because sponsorships were an afterthought for [major sports teams] but a primary source of revenue for AVP. The cost of obtaining sponsorships was too high. The Red Sox or the Chicago Bears or any major team makes about 80 to 85 percent from revenue and TV licensing. Sponsorships are kind of an afterthought [for them]; maybe they take up about 5 percent of their business. People who do sponsorships — IMG and CAA — they charge 20 percent to do it. That’s fine if you’re the Boston Red Sox as it all drops to the bottom line, but if the AVP pays 20 percent, it would just lose money faster.
Do you see the new presidential administration affecting the VC landscape?
The kind of things that the administration worries about that [may] impact things are so far in the future that it’s impossible to forecast what the impact will be. Less regulation is positive for new business models. Also, most impactful is if the new administration can get companies to bring back all the money they parked overseas. … If companies bring back tons of cash to the U.S., this means more M&A and more exits for VCs.
What does the name Crown Predator mean?
I watched The Thomas Crown Affair and then I watched Predator and it’s the same director.
Photo of Nick Lewin courtesy of Crown Predator