Lindsay Goldberg preps potential $800m sale of Refresh Mental Health, Seed platform Evolution Managers backs shop launched by ex-Riverside exec, HKW pushes into tech investing

HKW targets the tech space and PE firms bet on digital stock content.

Happy Wednesday, Dear Tech Take Readers!

This past weekend we escaped New York City for the Catskills to experience nature. Sunday morning, we woke up to find that a bear had climbed on the roof of our car and popped the corner of the soft top open. The car seats were covered with muddy bear footprints and the only thing missing was a bag of Cool Ranch Doritos.

New Tech Investor
HKW, an Indianapolis-based PE firm that invests in lower middle-market companies, plans to be a serious buyer in the tech space. The firm’s roots go back to 1903 when Paul Hammond founded Hammond, Kennedy, Whitney & Co as a merchant bank in New York City.

In April, HKW hired Jeff Bistrong, a former founder and head of technology M&A advisory group at Harris Williams, to build out HKW’s technology investing effort. Bistrong will be hiring a full investment team focusing exclusively on technology.

The former banker is known for helping Harris Williams establish its name as a tech M&A advisory shop. Bistrong worked on notable private equity transactions such as ZoomInfo’s sale to DiscoverOrg, Clearlake’s acquisition of Symplr, Community Brands’ sale to Genstar Capital and later to Insight Partners, among others, sources told PE Hub.

Bistrong said HKW will focus on investments in vertical enterprise software and horizontal software companies with high recurring revenue.

“On the vertical side, we intend to focus on healthcare IT, fintech, logistics and transportation software and government software,” Bistrong told me in a recent conversation.

“From a broader horizontal perspective, we expect to focus on business management software and security, cloud SaaS infrastructure and human capital management,” he added.

Read my full story for more on HKW’s tech plans.

It seems that private equity shops are getting increasingly more active in the digital stock content space.

Last week, Great Hill Partners invested in video stock company Storyblocks, which provides images and video footage clips to its subscribers. The company also licenses its content to users on an unlimited basis, unlike some other big players in the digital footage space.

According to Great Hill’s lead investor on the deal, Michael Kumin, third-party content providers have become beneficiaries of the remote-everything environment. Storyblocks’s digital content downloads more than doubled since the start of 2020, Kumin told me in a recent conversation.

“Storyblocks was performing very well through mid-March, and covid-19 has been net positive in terms of downloads and overall engagement,” Kumin said.

“Quarantine is limiting the ability for companies and professionals to go out and shoot their own content. As a result, stock providers like Storyblocks have benefited from in-house production moving to third party alternatives,” he said.

Great Hill is not the only firm to see a large market opportunity in digital stock content.

KKR this week backed Artlist, leading its $48 million fundraising in the music content licensing platform. In May, EQT acquired Freepik, a Malaga, Spain-based provider of graphic resources.

And last week, a Sydney-based design startup Canva closed on a $60 million funding round, bringing its valuation to $6 billion. The latest round of financing was led by investors including Bond, General Catalyst, Sequoia Capital China, Felicis Ventures and Blackbird Ventures.

Top Scoops
One of the challenging parts of the coronavirus downturn is fundraising. And an even harder prospect is a new manager launching a debut fund. So managers are using various strategies to launch new ventures into the market. One of those strategies is to work with a seeding platform for help in getting off the ground, Chris writes today on Buyouts.

Evolution Managers Capital, a partnership between HC Private Investments and family office Landon Capital Partners, is backing a new firm called Greens Farms Capital. Westport, Connecticut’s Greens Farms is being launched by ex-Riverside Co. partner Michael Kessler.
Greens Farms is the second manager on Evolution’s platform. The seeding platform provides $50 million to new managers, allowing them to invest and build a track record before moving into the big phase of raising a traditional private equity fund. Evolution Managers also provide new managers back-office support, and pledges to take a 20 percent LP stake in the manager’s first externally-raised fund.

Read Chris’s story on Buyouts.

Lindsay Goldberg is getting ready to sell Refresh Mental Health, which operates mental health treatment centers, writes Sarah Pringle on PE Hub. Private equity has shown increasing interest in behavioral health through the downturn. Widespread unemployment and loss of life will create long-term distress and the need for increased mental health services, Sarah writes. Read more here.

That’s all from me for today! As usual, don’t hesitate to reach me with any tips, ideas or suggestions at mvinn@buyoutsinsider.com.