Friendly-Capital for Accelerated Growth


Encipient™ Fund seeks to invest in companies that, with the addition of capital and management resources, can become leaders in their respective industry sectors. We provide revenue-based financing solutions to high-growth companies throughout their life cycles, often taking part in follow-on funding and building an investment syndicate that works together for the benefit of the company. We play an active part in building, guiding and growing companies. We also play a critical role in evaluating, selecting, and often assisting the CEO in the recruitment and selection of senior management team members.

Portfolio Management Approach

Encipient's portfolio management approach is designed to ensure the highest possible performance of each of its portfolio companies - bringing critical insights, strategic capabilities and world-class best practices in delivering superior investor returns. Our portfolio management approach is applied in each of the critical stages of the financing life cycle —including pre-investment and due diligence, initial investment, follow-on financing through the core growth period, and the process leading to a profitable exit. We continuously re-evaluate relevant investment options, and if necessary advise changes to ensure the optimal value-management of each portfolio company in the context of its selected growth plan.

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Our Investment Criteria

We look for companies that score highly in a number of important areas. These companies should have:

  • innovative products or services;
  • have sufficient revenues and gross margins;
  • growing market positions and strong management teams;
  • be capable of building shareholder value through market strength in product line, technology, distribution, manufacturing or brand;
  • a clear business strategy with multiple avenues for growth and market share gains;
  • industry growth drivers that are fundamental and compelling; and
  • seek an investor with shared values and a long-term perspective

Investment Process


Due Diligence


Our method of due diligence takes research and analysis to a new level. We perform all of the quantitative research steps listed above. In addition, we build profit & loss models, balance sheets, and cash flow statements for each investment candidate when appropriate. This concentrated process allows for a 'nuts and bolts' analysis of revenues, costs, working capital, capital expenditure, and financing. It also allows us to conduct sensitivity analysis. Based on what we learn firsthand, we generate buy and sell ideas internally, with no influence from outside brokers.

Transparency


We believe in transparency at all levels, whether in discussions with our investors, portfolio companies, or potential portfolio companies. As we make our way through our analysis and diligence process, we strive for transparency with the entrepreneur. Whether it's a periodic phone call or a once-a-week email, we work hard to maintain an open dialogue with company management.

Timliness


As investment professionals and entrepreneurs ourselves, we understand the time-sensitive nature of management’s work. After we identify a potential opportunity for investment, we make every effort to ensure a quick and thorough response.

Deal Sourcing

• Direct approach to partners/sellers • Referrals from specialist intermediaries • Dialogue with investment banks and other relationships • Follow-on transactions within the portfolio

1
Financing / Underwriting

• Close documentation • Form investment structure • Equity and financing funded • Finalize pricing and investment • Set financing terms • Prepare closing memo • Prepare post-financing strategy

3
Post Acquisition

• Activate portfolio management • Ongoing oversight by Risk Management Group • Value optimization to maximize returns

5
Due Diligence

• Market sounding • Extensive analysis • Consult external experts and advisors • Identify risks and mitigates • Arrange senior financing • Documentation • Investment approvals • Risk management

2
Fund Raising

• First contact with investors • Book building starts • Investors’ meetings • Release Private Placement Memorandum • Process client orders • Investors’ queries response • Commitments through Share Purchase Agreements • Funding and equity distribution

4
Exit

• Partial or full realization • Deal team’s responsibility • Approvals • Distributions of proceeds • Allocation of performance fees

6

Partnership with Management


We seek to partner with management to help grow these businesses by providing strategic guidance leveraging its industry knowledge and networks of relationships, assisting in identifying and executing add-on acquisitions and providing capital to support the growth plan. Target companies are often in the early stages of the development of the market opportunity and can benefit from the network and resources we can provide to help them capitalize on the opportunities ahead. We have been investing across a broad array of industry segments. This experience helps us identify and support investments that have

similar value creation levers despite serving different end markets. We target companies that offer value-added, mission-critical products or services that lead to recurring revenues and sticky customer relationships often with multi-year contracts. We seek to benefit from attractive rates of growth driven by end-market demand and increased outsourcing penetration, scale advantages allowing for differentiation and share gain by market leaders, fragmented markets with consolidation potential and strong free cash flow that can be reinvested.