The ‘Bertram High Five’ Principles

When Bertram Capital launched its second fund in 2010, Jeff Drazan and David Hellier set out again to combine their dual backgrounds in venture capital and private equity. Raising $500 million, up from their first fund’s $350 million ceiling, Hellier believes they have created a “perfect blend of both worlds” for acquiring middle-market businesses with outstanding growth potential. Hellier takes Privcap through the firm’s venture-capital origins to its current private-equity–based focus.

Marriage of Minds

Founded in 2006 by entrepreneur Jeff Drazan, Bertram Capital sought to replicate the successful business models of his past venture capital funds to more mature companies that were already generating cash flow. To add private equity diligence standards to the firm, Drazan hired industry veterans to oversee Bertram’s expanding portfolio. Hellier and three partners came on board.

Hellier says close personal relationships have allowed Bertram Capital access to less trafficked opportunities outside the auction market. Since the launch of the second fund, Bertram has added 10 portfolio companies to its platform, averaging almost a deal per quarter. Hellier says that Bertram looks for lower-middle-market businesses that need additional support. Hellier claims that unlike other operating partners who rely on outside consultants, Bertram delivers hidden potential faster and cheaper by leveraging its own internal expertise.

The “Bertram High-Five”

Hellier describes the process as the “Bertram High Five”—a series of operating principles designed to grow a company “3-to-5x” in three to five years. Hellier points to the sneaker brand Supra, which has grown threefold since Bertram bought it in 2010. “We built the platform,” Hellier says. “It’s completely accelerated the company and contributed to the bottom line.”

Bertram has focused its investment in three sectors: consumer-related businesses, business services, and industry. But what interests Hellier is “more the business model rather than the particular sector.” In businesses with less than $250 million in revenue, Hellier observes that the main challenge is often inadequate or unscalable information technology. In response, the “Bertram Lab” was created to help each portfolio company update its IT and intellectual capital. As a result, Bertram’s intensive approach has improved margins for portfolio companies such as Supra. Hellier attributes the success to the firm’s collaborative approach: “Our team will spend 40 to 50 percent of their time along with their team, working directly with the businesses that we’ve invested in.”