Investors are quick to brag about the impact and network they add to their investments. After all, they know a lot of important people, have access to cash, and an infinite source of knowledge.
Christoph Jost, Founder & Managing Partner at FLEX Capital, isn’t one of them. “We come in when the founders have already done the hard part”, he says. “They have scaled their business to 1 million EBITDA or 5 million in revenue. It’s clearly working already.”
De-risking meets rocket fuel
Jost and FLEX Capital take majority stakes in profitable bootstrapped businesses, with enterprise values up to 100 million euro.
But especially bootstrapped founders are known to be attached to their babies. After all, they spent a significant part of their life building their business.
But Jost explains that while it’s difficult, it’s often a win-win. “First of all, it allows the founders to de-risk. But almost any founder will tell you that things get different once you hit that first threshold”, he explains. “Suddenly, you have to focus on finances, or scaling sales teams, and all the other stuff you haven’t done before. And that’s what I believe we’re great at. We help them do these things, and they stay in it with a significant minority.”
FLEX Capital recently raised their second fund. At €300 million, it’s more than 2x as large as their first €130 million fund. “We want to deploy it across 8 to 9 platform companies”, Jost says.
With that fund, they aim to consolidate markets, which is a core ingredient of their acquisition strategy. So before they close a deal, they aim to have lined up multiple similar opportunities with a clear consolidation strategy in mind.
“You need to have certainty before you invest the first dollar”, Jost concludes.
Listen to the full conversation on The Wall Street Lab podcast with host Andi von Hirschhausen.