Two longtime Chicago investors have launched their own business with the goal of becoming a leader when it comes to investing in minority and women-owned businesses that have an impact on society.
Shundrawn Thomas and Anthony Hoye, both veterans of the industry and Black business owners, came together to launch The Copia Group (TCG) in September. The Chicago-based firm will provide both growth capital and resources to lower middle market companies.
TCG is attracted to firms with positive cash flows and dynamic earnings. In addition, the owners want to work with firms that make a social impact and partnered with Amsterdam-based Morningstar Sustainalytics, an investment research arm of Morningstar, to identify those firms.
Morningstar Sustainalytics will help the duo create a proprietary framework that will measure the social impact of targeted firms by focusing on diversity, equity and inclusion, equal opportunities, health and wellness, workforce development, and quality education. For each theme, the framework will provide definitions, criteria, thresholds, performance indicators, mapping and measurement.
TCG will assess sustainable intent and social impact at each of the four defined stages of an investment’s lifecycle. Sustainalytics will provide independent measurement and reporting at the investment and portfolio level, according to Thomas.
In addition to making a social impact, Thomas and Hoye want to also elevate firms owned by minorities and women.
“We seek to maximize the opportunities that we have in our portfolio to invest with diverse-owned companies. So that would be companies that are owned ... and are led by women or ethnically diverse individuals,” said Thomas. “To be clear, we’re not exclusively investing in diverse-owned companies, but that is an area that is a specialization for us.”
While Thomas and Hoye are looking to prioritize their investments with firms' social impact projects, that does not mean they are not interested in making a profit.
In other words, they see diversity and social impact as themes that lead to good returns.
“When people hear about impact, they may make an assumption that we’re trading off investment returns,” Thomas said. “We actually believe that when there are companies that are led by talented innovative leaders that manage their businesses in socially responsible ways that they actually have the potential to drive superior investment returns.”
When deciding on the firms to invest in, Hoye said, they will be looking at lower-middle-market firms with revenues of $10 million to 100 million and an enterprise value of about $15 million to 150 million. This group is appealing, Hoye said, because it is one of the fastest-growing segments and it is starved for capital.
“You want to be where the growth is and where the capital is needed,” he said.
TCG will focus on specific market sectors, including consumer services, financial services, business services companies, healthcare and manufacturing companies. The firm is looking at those specific areas because they are the ones that Thomas and Hoye have experience in and can provide the most support.