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Editor’s Note: The Business Journal’s issue this week highlights 50 rising entrepreneurs who have successfully raised funds and/or started companies. We asked three OC-based investors what they seek in entrepreneurs.
The Buffalo Charge
By Chris Van Dusen
Cows run away from the storm while the buffalo charges toward it— and gets through it quicker. Whenever I’m confronted with a tough challenge, I do not prolong the torment, I become the buffalo. —Wilma Mankiller
Entrepreneurship is full of storms. Market shifts, hiring dilemmas, supply chain breakdowns, regulatory changes—the list is endless. These obstacles aren’t rare or unpredictable; they’re an inevitable part of the journey.
From my experience, how founders approach these challenges often determines the success of their business. These entrepreneurial storms are conditions they must overcome, and they don’t go away if you try to avoid them or stay just barely ahead of them. If you try to run, like the cow in Wilma’s metaphor, you remain within the storm even longer instead of blowing through with strength and an ever-improving business strategy to see daylight on the other side.
I once worked with a founder whose company faced a serious cash flow crisis. Instead of avoiding the issue, she rallied her team, laid out the harsh realities and collaborated to find solutions. She not only faced the problem but also inspired everyone to face the storm together. This leveraged their combined capabilities, grit and innovation to achieve the best possible solution. Together, they tightened expenses, renegotiated vendor contracts, and launched a new product feature that brought in critical revenue. It was a grueling period, but because she faced the storm head-on, the company emerged stronger and better positioned for growth.
We look for companies that solve great problems with unique ability to disrupt incumbent systems or verticals.
An entrepreneur’s job is three things: vision, culture and fundraising with a P.T. Barnum-style flair.
A great entrepreneur has an unbridled commitment to mission and is the biggest advocate for what they’re trying to do. He or she has an unwavering belief even when people say it will never work. Great entrepreneurs know about the problem they are solving and have clear vision to get it over the finish line. They understand how their products will change the world.
However, too many founders say their solution can solve all problems—that might be true, but they don’t know. It’s a mile wide and an inch deep strategy, which makes me skeptical. Focus on where you have expertise and then scale into new industries.
When raising capital, an entrepreneur must prove to me why we’d allocate dollars there as opposed to somewhere else. They must know the TAM and what the company can achieve in the next three to seven years. We don’t invest in pre-seed startups; our focus is on early stage companies with strong growth potential.
The entrepreneurial journey has been romanticized in our culture, but it’s extremely hard. So many don’t understand what it takes to do. Startups typically fail not because they run out of money but because the founders gave up.
That’s why I love investing in second- and third-time founders. When someone has gone through it once or twice, they know what they are signing up for. That persistence—grit—is what I’m trying to find.
In Orange County, we invested in a couple of amazing entrepreneurs who are on the Business Journal’s list this week: Vic Merjanian’s Titan HHS and Kyle Kamrooz’ Bonus. See the special report for more details on their remarkable companies.
Chris Van Dusen is the Huntington Beach-based senior partner for Solyco Capital, which has invested $380 million in the past seven years.
An Effective Cash Flow
By Peter B. Robertson
We view investments as components of our clients’ family business enterprises, encompassing both public and private equities, bonds and even insurance. This perspective keeps us focused on the only reliable source of wealth over time: profitable economic activity. Each investment should be understood in business terms: What does the company do, and how does it make money? These investments should enhance our clients’ earning power through diversification and sound fundamentals, with a focus on strong management, clear strategy and business performance, not just stock price.
Determining the fair value of an investment is a complex analysis that has evolved over time. The price-to-earnings growth (PEG) ratio is a valuation metric we favor; however, valuation metrics are best viewed as a ceiling to help avoid making significant mistakes. An equity investment in a profitable company that effectively utilizes its cash flow generally yields a positive return over time.
The significant outperformance of mega-cap technology stocks in 2023 and early 2024 created a difficult environment for broader diversification. Now, that gap has begun to narrow, offering more balanced opportunities across the market.
Orange County provides businesses with access to innovation and talent, laying a strong foundation for success. The region features several universities, a diverse and cosmopolitan perspective, wonderful weather and access to one of the world’s largest ports. However, the high cost of doing business, including expenses related to labor, real estate and regulations, presents ongoing challenges. Many businesses are compelled to consider relocating to lower-tax states like Texas. Companies that can leverage Orange County’s unique strengths continue to thrive despite these challenges.
Our greatest investment successes are rooted in discipline, though the credit belongs to the outstanding teams behind the companies we invest in. Their execution drives results, and we view them as partners in building lasting value for our clients and their families.
Above all, the trust our clients place in us is the most rewarding measure of success. Their confidence, seen in both strong and uncertain markets, has been the cornerstone of Peak’s growth.
Personally, I’m proud to work alongside my son, Chris, whose technical skill and empathetic approach embody the values we hold as a firm. Together, we remain committed to a disciplined, long-term investment strategy that continues to deliver results for our clients.
Peter B. Robertson is the founder of Irvine-based Peak Financial Group, which makes investments for high-net worth families.
A Heart for SoCal Companies
By Tom Courtney
We seek to ride major growth trends in today’s economy, which include advancements in technology and healthcare, and reshoring or expansion of manufacturing and distribution in the U.S. In addition, we seek businesses that can do well in both good and tough times such as business services and environmental services.
We focus on investing in founder-owned and family-owned companies to help them continue their growth and success. We are looking to invest in companies with revenues of $10 million to $500 million, and pre-tax profits of $3 million to $50 million, in which we can invest equity of $1 million to $200 million.
Valuations are based on a combination of factors including historical financial statements, projected financial results, growth rates, profit margins and how defensible a market position, or moat, the company has, which could be from patents, or an incredible supply chain, and other factors including the cost of debt and equity capital.
We invest in companies throughout the U.S., but I have a special place in my heart for companies in Southern California, particularly Orange County, since that is where I live and work. Orange County has a dynamic business environment with companies such as consumer brands, light manufacturing, healthcare, technology and business services.
Much of our success comes from having a great CEO and team running the company. Businesses that have been great successes for us include Flojos, a maker of sandals based in Irvine, Bastech, based in Jacksonville, Florida, which makes environmentally friendly chemicals for fertilizers, and American Piping Products, based in Chesterfield, Missouri, which distributes steel piping. In the first two, we acquired the business from owners seeking to retire. In the case of American Piping Products, we partnered with an outstanding CEO to provide liquidity and help continue the company’s growth.
We are also flexible about investment size and our time frame and have held investments for 10 to 20 years or more. We seek to build great businesses with lasting value.
Tom Courtney is the founder of Newport Beach-based The Courtney Group, which has completed 27 private equity investments since 1999.