What we look for
We look for exceptional entrepreneurs with proven business models within IT-services, Software as a Service and e-commerce. The size of the company we invest in and of our investment varies depending on the dynamics of the market the company operates in. However, the companies are usually privately owned, have a turnover between MEUR 3 and 20 and have been profitable for some time. A typical equity investment ranges from MEUR 2-5. However, as we are privately owned we have an opportunistic mandate and can do investments from MEUR 1-20 and in relevant cases combined with debt.
We have a flexible approach and are able to do all types of transactions e.g. buyouts, equity growth stage, listed and unlisted. Historically, we have done investments in both early and later stage companies as well as in listed companies in the sectors we operate in. We are positive towards increasing our stake over time, averaging up in portfolio companies we have learnt to know.
Typical characteristics when we invest
Many companies at this stage are led by passionate and highly skilled entrepreneurs that have built their company with energy and strategic discipline. Often, the high growth of the company has resulted in a need for increased competence in one or more areas that recently has become more important for reaching the next step.
Our value creation process
Usually, we engage in the companies mainly through the boards and we do not seek or aspire to take part in the daily operational decisions. We believe that the founding entrepreneur or the CEO are the one who knows the business the best. However, through the board, we engage our industrial experts and ourselves closely with the management to identify long-term development areas and to create a plan for the next coming years. Usually, the strategic plan involves a clear exit goal as well as a concrete execution plan. During the investment process, we strive to learn the key strengths of the entrepreneur and the organization in order to identify the most critical areas where the current team and organization need support.
The needs vary substantially between every company. Common areas for support include financial reporting, development of organizational processes, recruitment of senior management, risk management, financing of the company as well as preparations for a future exit and M&A transactions related to the business.
The exit phase
Many entrepreneurs have a goal or at least a part goal to sell the whole or part of its ownership in a larger transaction in the future. In our opinion, the outcome of such a transaction is a mix of several factors among which some luck is one. However, the major factors can be heavily influenced and we take an active role in these, helping the management to maximize value creation and positioning the company correctly for a potential buyer.
Our investment horizon
As opposed to many other similar investment organizations, Rite has no external investors. The capital comes from our partner group’s own money. All professionals working at Rite are owners of Rite and hence true partners to the other owners of the portfolio companies. This increases the sense of being on the same side of the table, both for the entrepreneur and for ourselves.
The time horizon of our investments depends on the specific situation of each company and on what we agree on with the other owners at the time of the investment. It usually ranges between 3 and 6 years. However, as no external investors are involved, we will never be forced to divest a holding because of the termination of a fund or internal politics, but can instead focus on building value until the time is right for an exit.