APERION Reveals How It Chooses To Invest In Early-Stage Ventures, Producing Maximum Impact

The world of venture capital and private equity can be quite opaque at times, with the criteria behind why funds choose to invest in certain companies often undisclosed. This is often because the funding and decision-making in most VC or PE firms is under the discretion of a very small number of people. Also, many early-stage ventures (ESVs) just want to make a payday from the investment, and both parties would just get on with their lives, only doing the bare minimum to fulfill the investment contract

APERION, a private equity investment firm founded by veteran investor Robert Purdy, seeks to democratize this world by adopting a more human-centered approach. APERION’s investments are in the following sectors: industrial technologies & infrastructure revolution, innovative opportunities in supply chain & logistics, transformational ideas and technologies in fintech & digital banking, and disruptive health & wellness platforms.

Drawing on Purdy’s more than 30 years of experience in the PE space, APERION has the ability to source and develop an assortment of unique ventures through its vast networks, critically analyzing the opportunities and actively engaging with the companies it has invested to help them execute their visions and missions.

According to Purdy, unlike other PE firms that seek to play the board by investing in hundreds of startups, APERION selects six to eight startups per Fund that show a lot of promise and works with them closely, actively engaging with them and guiding them towards growth, ensuring that they make maximum impact in changing the way business is done and how life is lived.

APERION also exercises oversight and governance in the businesses it invests in, and it requires that these businesses maintain utmost accountability on a daily, weekly, and monthly basis. This high-risk, high-reward strategy has proven to be successful, as APERION’s Alpha Fund now has an enterprise value of more than $1.6 billion, and it continues to grow, providing returns of over 240% to its investors and partners.

Purdy says that one of the criteria APERION looks for in companies it will invest in is the presence of a detailed business plan. He says that entrepreneurs would often come to him with a one-pager about their business. He tells them to come back four weeks later, providing them with a template that will guide them in creating a more comprehensive plan that’s usually close to a hundred pages. The entrepreneurs who are most passionate and well-prepared usually come back before the four weeks are up.

“If a company can’t create a more detailed business plan within that four-week period, then I tell them not to waste our time,” Purdy says. “The most serious entrepreneurs can leave their ego at the door and they tell us that this is what they’ve been missing, as working on the detailed business plan forces them to work out the intricacies of their business that, unbeknownst to them, are crucial for their success, and our top target potential investments,..we will roll up our sleeves to actively help them to build that plan. We want to make sure that our investment can help a business get over the line, from conception, to inception, then to commercialization.” 

Purdy shares that one of the companies APERION is investing in is ECOR, which has created a circular manufacturing process that converts bio-based (cellulosic) and post-consumer/

post-manufacturing residual feedstocks into 100% recycled and recyclable content panels. He says that ECOR’s products are especially valuable today, as gypsum, the mineral used to build conventional panels, is a finite resource. In one of ECOR’s projects, it works with an airport to take the grass cut from the areas surrounding the runway, as well as the garbage produced in the airport, to create the wall boards that are being used in constructing a new terminal.

According to Purdy, ECOR’s process has the potential to have a monumental impact on the environment – both in recycling waste and reducing the need to mine gypsum, and produce a multitude of other consumer products – and this is what led APERION to invest.

In an unusual situation for a PE firm, one of APERION’s investee companies is Lotus Vie, a company owned by Purdy’s wife, Julia. Lotus Vie provides health and wellness products, such as teas and nutraceuticals, targeting often-ignored, yet promising, niches, one of which is women undergoing menopause. Purdy says that what made Lotus Vie stand out is that virtually all women in the world will undergo menopause at some point, but there are not many businesses targeting this market, resulting in a billion-dollar opportunity each year. 

While it seems strange at first, Purdy says that not one partner has backed out of APERION upon learning that it is investing in his wife’s company. Instead of seeing it as a conflict of interest, they admire how Purdy is upfront about it, and they also see it as proof of him wanting the fund to succeed, as he now has a personal stake in it. As Purdy is often quoted saying “Failure is not an option”

Robert Purdy,vChairman and CEO of APERION

“We’ve had incredible reception from new investors, and around 90% of investors in APERION are people I've never met before. This shows that their trust goes beyond their personal connections and that they truly believe in APERION’s mission. People now know the DNA of the firms that we are most likely to invest in, and what we are looking for are people who understand our investment playbook,” Purdy says.

This post was authored by an external contributor and does not represent Benzinga's opinions and has not been edited for content. The information contained above is provided for informational and educational purposes only, and nothing contained herein should be construed as investment advice. Benzinga does not make any recommendation to buy or sell any security or any representation about the financial condition of any company.