Scaling Star Mountain to Reach Success 

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Star Mountain Capital is a specialised asset management firm focused on investing in the large and underserved U.S. lower middle-market of companies with typically between $3 million and $15 million of EBITDA. We invited Brett Hickey to tell us more about how the firm came to win the coveted title of Most Outstanding Specialised Asset Management Firm - New York in our renowned 2017 Global Excellence Awards.

Founded in 2010, Star Mountain’s differentiated business model includes a custom-built media and technology platform and brings proven, large market resources to smaller businesses as a value-added lender and investment partner. Brett discusses the firm’s investment focus and how this sets it apart from other asset managers in the market.

“Approximately 90% of all businesses in the United States have less than $100 million in revenue, are typically owner-operated, and are not controlled by large private equity sponsors. We call these companies the ‘Growth Engine of America,’ since this niche is where most job creation and economic impact is created. Star Mountain is built to specifically address the challenges and opportunities of investing in these established smaller U.S. companies.

“Additionally, there are approximately 200,000 established businesses in the United States that have between $10 million and $150 million in annual revenues. Many of these businesses are seeking value-added debt and equity investment partners to help achieve their objectives. Star Mountain’s strategy of having partners in five cities, in addition to engaging industry advisors and operating partners in more than 20 additional cities throughout the United States, provides us with ample coverage to create superior risk-adjusted financial returns for our investors, and to also create substantial positive economic impact and job creation by investing in and helping build smaller businesses.”

The firm invests into private, established small and medium-sized businesses through three complementary verticals providing Star Mountain with distinctive origination, underwriting and portfolio management capabilities: Direct Investments, Strategic Primary Fund Investments and Secondary Fund Investments. Brett outlines the firm’s investment focus and how it works to ensure strong returns for its investors.

“Here at Star Mountain, our mission is to create superior risk-adjusted financial returns for investors and to create substantial positive economic impact and job creation by investing in and helping build smaller businesses, a mission that led us to trademark - Investing in the Growth Engine of America®.

“To help us achieve this, our distinctive platform provides enhanced origination, underwriting and portfolio management capabilities and allow us to provide investors with diversified, scalable and feeefficient access to this large and underserved market where we believe superior risk-adjusted returns are available due to the market inefficiencies. Part of our value-added platform comes from our strategic investor and advisor relationships, who also provide Star Mountain with more than just capital.”

Technology is creating substantial changes in the way everyone in every industry does business, although the rate of implementation and change varies. The impact of technological disruption in the alternative investments industry, while it has occurred at a slower pace than other industries, is no different. Brett talks us through Star Mountain’s approach to embracing the latest technological developments and how the firm works to always offer a truly cutting-edge service.

“A common misconception is that you must be a large firm to have a technology strategy. As an innovator and investor in established private small and medium-sized businesses, technology for Star Mountain is at the core of our operating model with values such as innovation, collaboration and investment in long-term growth. From the beginning, we invested in technology to build our competitive advantage, including adding a full-time Chief Technology Officer as a partner, to invest in the sustainability, scalability and user experience for the benefit of our stakeholders. Star Mountain has invested into technology and systems out of the belief that technology can provide significant competitive advantages in sourcing investment opportunities, underwriting, monitoring investments, adding value to portfolio companies, managing risk and investor reporting.”

Although technology and a strong investment approach have been vital to the success of Star Mountain, Brett is also keen to outline how the firm’s collaborative, supportive internal culture has also played an important part in driving the firm to the strong position it is in today.

“Our culture at Star Mountain is one of the most important drivers of our success. The real secret sauce of any successful organisation is how its people operate, think and collaborate. I like to call it ‘cultural capital’. Point to any successful company, and often, you will find an abundance of strong cultural capital sustaining it.

“Great cultural capital inside companies is like a fingerprint; no two are the same, and what works for one may not work for another. But we believe they all share certain characteristics. They have aligned individual goals with that of the company – an alignment of interests – that in our case is accomplished by including 100% of our employees in the carried interest of our funds. Other things are more esoteric – a desired sense of purpose, passionate focus on technology to improve our operations, and support of outside-the-box thinking about what we do. Also, we focus on the things that make Star Mountain a comfortable and engaging place to work, like fresh and healthy food, standing desks, lots of windows and sunlight, etc.

“Personally, I believe this nexus between business and purpose is where most successful organisations thrive. In fact, a truly great corporate culture is the greatest single asset of a truly great business. Organisations that focus on creating the most cultural capital possible are usually the ones that end up with the most sustainable, scalable and rewarding businesses over time.”

Overall, Brett is optimistic about the future of Star Mountain as she details the developments that the company has in store.

“Looking ahead, we are very excited by what the future holds for our business. We have a large market to execute against but that is what we were built for, which can be summarised by four core elements. First, we invest defensively in established, smaller companies with low leverage. Secondly, we get paid for work where we concentrate on more labour-intensive loans to private businesses that have complex capital needs, such as financing an acquisition. Third, we help these companies grow, employ more people and create value in their communities and the economy. Lastly, with respect to team, our most important asset, we focus on high quality people who want purposeful and engaged lives – we find these people maximise long-term value as aligned partners in what we do.

“All of these developments will help us to ensure that Star Mountain continues to grow and prosper, providing our investors and the firms we invest in with the support they need to grow and succeed.” 

Company: Star Mountain Capital, LLC

Contact: Brett Hickey

Contact Email: [email protected] starmountaincapital.com

Address: 135 East 57th Street 25th Floor, New York, 10022, USA

Phone: 001 646-787-0275

Website: www.starmountaincapital.com

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