- Inkwell to invest $3 mln to $30 mln equity per deal
- Will invest deal by deal
- Wants to add diverse executives to portfolio companies, boards
Inkwell Group launched with the goal of building value by adding diversity to its portfolio companies.
Founded by Chijioke Asomugha and Marques Martin, two PE executives of African-American descent, the lower-middle-market firm will install diverse executives and boardroom leaders at its PE holdings. Martin pointed to the “Inkwell suite,” which currently has 10 operating executives and will serve as a “bench of diverse talent” that they will “thrust into action.”
Diversity can mean many things, Martin said. Inkwell — which refers to the ink used to write out aspirations and tell one’s story — will focus on racial and gender diversity, he said. Companies perform better when employees are not judged by their looks and are able to be themselves, Asomugha said. “Diversity helps people feel comfortable about what they are,” he said. “They are able to deliver their best selves.”
Inkwell has offices in Washington and Cleveland. It will focus on sectors including healthcare, financial services, industrial manufacturing, as well as media and telecom. The firm will seek to invest $3 million to $30 million equity per deal, taking controlling stakes.
Inkwell plans to execute two to three deals over the next year and expects to close its first deal in Q1, the executives said. Inkwell also does not have a fund but has relationships with high-net-worth individuals and family offices that let it invests on a deal-by-deal basis, the executives said. “We will start marketing a commingled fund within two years,” Asomugha said.
Asomugha and Martin have backgrounds in PE, investment banking and operations. Asomugha was executive vice president and global head of corporate development at ERICO International. He was also a principal investor at Cyprium Partners and previously worked at Goldman Sachs.
Martin most recently was a senior VP at KeyBank, where he directed the small business team with $4 billion of assets. He had prior roles at Riverside Co and H.I.G. Ventures.
The two executives met in Cleveland in 2009. The U.S. was in the midst of the financial crisis and diversity was not a primary goal for private equity. Very few — only three — African-American PE professionals were working in the city at the time, they said. A mutual friend introduced them and they hit it off. Martin said the lack of diversity prompted them to wonder, “Why do all the investors look the same?”
Both Asomugha and Martin referred to the 2015 McKinsey & Co study Diversity Matters, which found companies with the most diverse gender leadership teams were 15 percent more likely to produce financial returns above the national industry median. The results were better for ethnic/racial diversity. These companies were 35 percent more likely to have financial returns above the national industry median.
Conversely, the report says, companies “in the bottom quartile for both gender and ethnicity/race were statistically less likely to achieve above-average financial returns than the average companies in the dataset (that is, they were not just not leading, they were lagging).”
Diversity is a hot-button issue in private equity. Much has been written about the industry’s efforts to add more women to its senior ranks.
Inkwell itself will also seek to be diverse and wants women represented at the GP level, Asomugha said. The firm currently numbers four professionals, including two associates (one is Indian, the other Asian). It is looking to hire and plans to have seven employees by next year.
“Yes, we plan to be diverse throughout our firm — to live the model that we are investing in,” Asomugha said.
Action Item: Contact Inkwell Group: +1 202-780-0573.
Update: This article has been updated with another reference to the McKinsey report and with a link to a Buyouts report.
A couple forms the word “Love” with their hands during “Bridge of Coexistence,” part of the inauguration ceremony of the European Capital of Culture 2016, in San Sebastian, northern Spain, on Jan. 23, 2016. San Sebastian and Wroclaw in Poland are jointly hosting the European-Union-promoted initiative, aimed at highlighting the diversity of cultures in Europe. Photo courtesy Reuters/Vincent West