- Hybrid independent sponsor-committed fund model
- Sources deals for western U.S. companies via SoCal network
- Solis to continue on, raise third fund: founder Lubeck
Elan Growth Partners has launched to provide capital to lower-middle-market western U.S. businesses in manufacturing, software, business services and food.
Founder and Managing Partner Craig Dupper, formerly of Solis Partners, wouldn’t say how much Elan raised in its initial round.
Launch investors will be the firm’s primary source of capital, he said, but “we do expect to include other institutions that have a desire for direct investment in our dealmaking.”
Dupper said Elan, Carlsbad, California, will draw on “the relationships we’ve had in the past,” including funds-of-funds that made sidecar investments with him on one-off deals.
These investors are “more and more focused on the independent-sponsor community,” Dupper said.
“A lot of institutions have a desire for direct investments, given the optionality that provides and the ability to flex up on deals they like,” in addition to “fee efficiency and more tailored carry structures that appropriately award performance and protect on the downside.”
Dupper has been investing out of Southern California for 16 years. Solis, his prior firm, is headquartered in Orange County. Though Elan won’t focus exclusively on California, “we’re going to be prospecting very aggressively on that region we define as Ventura County South,” Dupper said. All investments will be sourced from relationships in the area.
“There’s very little local private equity that does what we do, especially in the size range” of $1 million to $6 million Ebitda, he said. “The reality is that not only do you have a high density of companies in this region, but you’ve got demographics in your favor.”
Dupper said local knowledge and connections will be especially important as Elan pursues “managed exits or transitional-type deals,” providing some immediate liquidity to business owners before working to maximize eventual value.
“We can speak with a founder that’s had consistent but not necessarily explosive growth. … They’re faced with, ‘How do I get visibility on where I want to be in five to seven years?’ And we can help them answer that question.” The firm will invest $5 million to $25 million of equity per transaction.
While Elan will begin by pursuing a hybrid model, between independent sponsor and committed fund, “we will eventually have an institutional fund of some format,” Dupper said.
Another Solis alum, Max Young, will join Elan on May 1. Dupper remains a partner of Solis Capital Partners II, and will stay in that capacity until the fund is fully realized.
Solis Founder and Managing Director Daniel Lubeck said his firm will continue to invest and intends to raise a third fund. “It may be a variation of traditional committed funds, but something that we feel is appropriate for the market at this time,” he said. Dupper’s departure was “a mutually agreed-upon decision,” he added.
Action Item: For more information on Elan, including Craig Dupper’s attributed deals, visit http://elangrowth.com.
Photo of Craig Dupper courtesy of Elan Growth Partners