We seek opportunities
in underserved markets.

Here’s how we approach our partnerships.
More Than Capital
Our partners bring deep investment experience, as well as marketing, finance and legal expertise. Agile and transformative branding and marketing strategies are paramount to step function and durable growth. Our partners include an award-winning creative agency, John McNeil Studio.

Building a brand, engaging consumers, establishing market validation and scaling revenues are increasingly dependent upon resonate brand building, innovative marketing and a targeted digital strategy.

Pegasus Growth will work closely with portfolio companies to develop, refine and position brands, to develop strategic marketing strategies, to enhance consumer product development, to refine the customer experience and to passionately engage with the consumer.


Investing Our Money

The Partners have committed 50% of the Fund’s capital.  We believe that a structured equity discipline mitigates risk while providing equity participation.  Our aim is to better align interests, to mitigate risk of capital loss and to disproportionately reward the Founder and key employees for successful execution.

We are not a typical private equity firm generating large fees and primarily managing other people’s money. The partners in a typical fund commit 1%-3% of total capital.

We believe that we are thoughtful and sophisticated with the asymmetrical structure of our investments. The participating preferred structures provide debt-like investment-to-value and seniority, while providing equity-like upside. We intend to take minority equity positions that are protected with strong investor rights and control provisions.

We strive to better align interests with the Founder and key employees of our portfolio companies.

Our mission is to partner with passionate and driven entrepreneurs to grow innovative and disruptive consumer-centric businesses. We strive to collaboratively develop a “Plan”and to disproportionately reward the Founder and key employees for achieving the Plan results.

Structured Equity

Asymmetrical Risk and Return

Consumer-Oriented Focus
Consumer spending accounts for 68% of the U.S. economy. Enabling technologies and shifting consumer preferences are disrupting large market categories. Also, entrepreneurial, small businesses are reliant on B2B services to accelerate growth, to improve unit economics and to enhance the customer experience.

We intend to invest with passionate and driven entrepreneurs to build brands, to strengthen customer engagement, to accelerate growth and to achieve sufficient scale for operating efficiencies, and marketing heft, as well as to attract institutional private capital and strategic corporate investors.

Requisite Dynamics:
  • Passionate & driven founder
  • Capable management team
  • Market validation
  • Strong near-term growth
  • Consumer engagement
  • Attractive unit economics
  • Path to attractive net margin
  • Cogent strategy to achieve speed to scale
Our categories of focus:

B2B Services

FinTech

Sports & Fitness

Business Process Outsourcing

Health & Wellness

Financial Services

Pet

Early Stage Growth

Why Small and Lower Middle-Market Businesses? Why Private Equity?

According to U.S. Small Business Administration and U.S. Economic Census statistics, there are approximately 30.2 million small businesses employing approximately 48% of U.S. workers. Of these businesses, less than 300,000 or 1% have revenues greater than $5 million with approximately 260,000 businesses having revenues between $5 million and $50 million.

Across nearly all long-term time horizons, private equity has outperformed the public markets and generated strong returns on both an absolute and risk adjusted basis. And, the middle market and lower middle market have consistently outperformed larger private equity investments.
As private equity firms have raised larger funds, many have focused on larger and later stage investments. We believe, excluding technology, life science and media, small and lower middle market growth businesses are underserved by institutional venture capital and private equity.

We believe that the small and lower middle market strategy better aligns the incentives of the General Partner, the Limited Partner, the entrepreneur and the portfolio companies. Unlike larger private equity funds, the management fees are allocated to offset SG&A expense... wealth creation is derived from successful exits.

Targeted attributes:
  • Passionate & driven founder
  • Capable management team
  • Seeking growth capital
  • No prior institutional capital
  • Revenue: $5–$50 million
  • Market validation & differentiated market portion
  • Catalyst for near-term growth
  • Attractive unit economics
  • Path to attractive net margin

Compelling Risk Adjusted Returns

Historical return data suggests that it is optimal to source the market’s beta in the most fee and tax effective manner, while sourcing alpha from the private markets.
We Invest in the Heartland
According to data from Pitchbook, 80%+ of venture capital investments in 2017 were invested in the San Francisco Bay Area (44%), New York City (16%), Boston (12%) and Los Angeles (9%).

By contrast, dynamic growth regions which are outside the VC/PE-focal markets are underserved by institutional capital.

meet the team and our partners.

find out more
Subscribe for free resources
& news updates.
Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form

Address

stay in touch

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form