Investment Philosophy and Criteria
Beechtree Capital, LLC has enjoyed an excellent success rate in more than 80 investments for the following basic reasons: First, as George says, “we back and select the best managers available. If a manager doesn’t have great passion and vision for his or her product or service, we won’t be interested regardless of the property rights, value of the subject matter or the great prospects of the industry. Our track record of working with, mentoring and developing outstanding managerial talent is the single most important element of our success.” The average CEO stays with Beechtree-related companies for many years.
Second, we require that the subject industry is large enough or has the capacity to permit the manager’s and Beechtree’s agreed upon scale. This requires deep insight into the target industry. Beechtree prides itself on careful research and engaging top experts to aid in our planning.
Next, we work closely with managers. We are diligent in jointly establishing reporting and other investment requirements. Management, board and committee meetings involve all levels of management, not just the upper echelons, encouraging participation and perspective from all viewpoints.
We care about everyone in our companies. Everyone. Therefore, we develop management teams that recognize the contribution every team member can make, and foster the creation of company environments where respect and fair treatment are imbued in company culture.
Further, we do our best to uphold accepted ethical standards, to be globally responsible and to achieve and encourage the highest standards of business practice. We believe that companies belong to their communities, not just to investors. Capital is one of the elements of venture success, but not necessarily the primary aspect. The company should also provide the highest growth experience for everyone involved. Perhaps it is this value placed on the individual that explains why we have very little attrition, and our managers and related investors trust us.
Venture investing and managing are areas of great creative involvement, and, in our case, attainment. At Beechtree, we aspire to invest in or advise high growth companies in emerging industries with business models that lead to positive operating income and cash flow within three years. We also look for a clearly defined, attainable exit strategy. We don’t care if the exit is in two years or 10, as long as the return on capital is acceptable.
We don’t have to report to institutional investors as so many funds and investment firms do. We invest for ourselves and for our long time associated investors. We work and rework our companies, and we succeed. Short-term returns are great, but at Beechtree, we believe it’s more important that we don’t sustain losses and that we secure returns that exceed our competitors. Having led or participated in more than $600 million in investments over 20+ years with a realized and expected return on capital of over 300% proves the viability of this philosophy.
Beechtree Capital has acted as investor, manager, advisor and facilitator with a wealth of experience and shared achievement. Our partnerships and investments have been largely successful, and the resulting relationships have been extremely helpful in subsequent endeavors. We leverage our long-standing relationships and proven history when serving companies and people we believe have the potential to succeed and to become future industry leaders and Beechtree associates.