From the Portland Business Journal.
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By Malia Spencer – Staff Reporter, Portland Business JournalFeb 3, 2020, 11:55am PST Updated Feb 3, 2020, 4:51pm PST
Portland investment firm Sortis Holdings Inc. launched a new venture growth fund to invest in consumer brands to expand e-commerce capabilities.
The firm is targeting $10 million for the fund, and it is open to accredited investors, with a minimum $25,000 investment. It is the third fund for the organization that also has a two real estate related funds and an Opportunity Zone fund.
Called Sortis Growth Venture Fund, this vehicle is designed to be a hybrid of venture capital and private equity. It is targeting profitable consumer product businesses in active lifestyle, food and beverage, hospitality, health and wellness, personal and beauty care, accessories, niche apparel and possibly pet products, said Butch Bannon, principal and fund manager.
The company is targeting businesses that have sales over $2 million and net profit of at least $50,000, he said. The fund works with Portland digital agency WLCR.io, which is an expert in building on the Shopify e-commerce platform. That partnership will help portfolio companies build e-commerce expertise.
“We want to create an unfair advantage for our entrepreneurs,” said Bannon. He believes that can be done by working with the team at WLCR to quickly scale a brand’s e-commerce and sidestep any common pitfalls in building an e-commerce team from scratch.
“During the salad days, every scalable business has a moment most ripe for acceleration. You hate to miss it, and you can’t always predict it, but you can harness it,” said Adam Shearer, founder and CEO of WLCR, in a written statement. “The ecosystem we’re creating with Sortis allows us to intervene at the most opportune time by creating a confluence of the merchant, the money and the moment.”
Bannon and Sortis founder Paul Brenneke see opportunity in smaller consumer companies that larger private equity isn’t designed for.
“There are thousands of private equity funds in the market at this point, and a lot are really risk-averse and will not look at a business under $3 million to $5 million EBITDA. And we feel with our solution we can come into businesses that are in a really great place to build incredibly strong businesses,” Bannon said.
In addition to the revenue and profitability targets, the fund is focused on companies that have created strong brands that resonate with a loyal user base and see 25 percent to 30 percent growth.
Check sizes will vary, but Bannon expects the smallest to be around $100,000 and go as high as $1 million. Bannon already has a pipeline of potential investments locally and in the broader Pacific Northwest. He expects to make the first investment in the next 90 days.
Sortis Growth Venture Fund is the latest new investor to crop up focused on consumer products. Last summer, Schmidt’s Naturals founder Jaime Schmidt and her husband Chris Cantino launched Color, an early-stage investment fund for consumer packaged goods and other consumer brands. In December, a pair of staffing agency executives launched Cowen Partners Venture Fund to write seed checks for niche market products or what they call “community-based businesses.”