As of June 2021, Quadrillion Capital is offering two sector funds, available to accredited individual investors, family office investors, and institutional limited partners. Fund 1 is focused on acquiring US middle market companies in the Industrial & Manufacturing sector. Fund 2 is focused on acquiring US middle market companies in the Tech and Tech Enabled Services Sector.
As of June 2021, Quadrillion Capital is offering 4 individual accreditor investor funds.
These are:
1. Quadrillion Capital Technology I - Growth
2. Quadrillion Capital Technology I - Income
3. Quadrillion Capital Industrial and Manufacturing I - Growth
4. Quadrillion Capital Industrial and Manufacturing I - Income
The growth and the income funds differ in types of payments to investors once a company is sold (i.e., a liquidation of the fund's assets). These payments are part of the cash distribution waterfall. For the income funds, members will receive a preferred return of 6% on their investments, but no profits are distributed. For the growth fund, members will not receive a preferred return but will receive a higher percent of the profits distributed.
The investment is illiquid with an 8-year lock-up plus two one year extensions, if required. During the lock-up period, there could be liquidity as companies that are sold prior to the fund term may result in cash distributions to investors.
Minimum Investment is $50,000 per fund. To achieve the minimum, investors would need to purchase a minimum of two (2) Units at $25,000 per Unit.
Annual management fee is 2.8%
Principally growth, but if opportunities arise to distribute dividends to investors, the fund manager may opt to distribute them or to use them to pay down debt
20% CAGR (or better)
For investors who opt to purchase shares in the Income Fund, there will be a 6% preferred return. A preferred return—simply called pref—describes the claim on profits given to preferred investors. The preferred investors will be the first to receive returns up to a certain percentage once a company is sold.
At the end of the first quarter that you invest in the Fund.
8 Years
Once a company is sold, the investment manager will distribute cash back to members based on a specific formula. This formula, or waterfall, is outlined in detail in each private placement memorandum for each fund, and can be obtained by contacting one of our investment representatives. We also have examples of the distributions waterfall we can share with you
This is an equity investment where Quadrillion Capital seeks to acquire operating companies. In some circumstances, Quadrillion will acquire not only the operating company, but also real estate assets (like manufacturing facilities, corporate headquarters, etc.) as part of the operating business.
Investments in private equity in general are not correlated to the Russell 2000 and should provide returns regardless of any movement in the stock exchange during the same time period. This is why Quadrillion Capital believes the Fund is a compelling way to improve an investor’s overall portfolio risk profile.
The businesses selected for equity investments are screened based on Quadrillion Capital's expertise and understanding of the likelihood of success of buying, improving, and selling these business over a period of time. Quadrillion Capital takes a highly data driven approach to screening and due diligence of its potential investment opportunities to minimize risk and improve our understanding of what levers can be pulled to improve performance and facilitate growth in each investment opportunity
The Management Team has worked as private equity investors, line operators, and advisors to companies undergoing rapid transformation for the last 25 years. Collectively, the team has over fifty (50) years of combined experience in screening, acquiring, operating, owning, and growing small and mid-sized businesses.
Quadrillion Capital seeks to acquire control interest in companies. This means we have a majority interest in each company, decision making authority at the Board of Directors level, and influence decisions directly in each company. We work with management teams to define specific initiatives to expand profits, improve operations, and enhance digital capabilities at each company we acquire. These initiatives are then implemented by the company with an individual from our team assigned for oversight and support. Our implementation model is highly collaborative and data driven, so our "risk" (or likelihood) of success on each initiative is high. We invest in companies where we have deep knowledge and in investment situations that we feel favor our investors.
We are experts in technology related, industrial related, and manufacturing related businesses. Our private placement memorandum lists various industries within these sectors that we focus on for investment opportunities.
We invest in companies that are headquarted in the United States only or where we can relocate headquarters to the US easily. Many of our acquired companies will have operations internationally, and we have deep experience working in different countries (China, Japan, South Korea, Germany, France, UK, Australia, South Africa, et. al.) where we have significantly improved operations and grown sales.
In addition to providing investors financial information on the performance of our sector funds, Quadrillion Capital will conduct annual meetings (via Zoom or other online platform) to share information and data on specific portfolio company investments and our progress.
Today, Quadrillion Capital has one active investment its portfolio. We are also actively negotiating a letter of intent (LOI) with a company who could become our second investment.
Given our active involvement in each portfolio company, Quadrillion Capital intends to invest in no more than two (2) investment opportunities per sector Fund in an eighteen (18) month period
Quadrillion Capital screens companies to understand if they have a reason to exist, a set of defendable advantages (like strong customer or supplier relationships, needed products or services, etc.), and tailwinds in their core markets. We believe that acquiring companies with below average performance and getting them to average or above average performance relative to their peer group is a strong investment thesis for investors. We seek to find companies that have correctible problems we can address. Middle Market companies often suffer from a lack of capital, lack of talent, and inability to leverage digital tools. Our team is well equipped and prepared to address these gaps and help businesses grow.
We focus on investment situations that are more complex than average. This means that the acquisition candidates may require more time and effort to negotiate and it may involve organizing for additional risks. All in, these more complex investment situations tend to be less competitive too, meaning that many investment firms shy away from them either because they don't want to invest the time or they don't have the capability to resolve the issues presented. When an investment opportunity is less competitive, Quadrillion finds we can acquire the company for less money.
At Quadrillion Capital, we develop an initiative-based plan before we buy each company. We call this plan our "10^15 Plan." 10^15 (ten to the 15th power) is the number quadrillion! More importantly, 10^15 means the 10 initiatives we can implement in the first 15 month after we own a business that will materially improve the company's performance. Each initiative is well defined and is grouped into the following areas: (1) cost reduction, (2) gross margin improvement (GMI), (3) revenue growth, (4) working capital management, and (5 ) digital enablement. Our 10^15 plan is sequenced and co-owned by members of our team and people in each portfolio company. Our 10^15 plan also shows how the company will grow profitability from the EBITDA level when we buy the company to its 'full potential' EBITDA, which is our target and the level at which we will look to sell the company
Yes, private equity investment carry a high risk. A well-balanced portfolio includes an allocation to risk, and you should consider this investment as an allocation to the risk portion of your portfolio.
Our private placement memorandums (PPMs) have certain disclosures which we encourage all investors to read and understand.
In our experience, recessions and periods of economic weakness result in more distressed and underperforming companies being sold. We believe that the current economic climate provides us with substantial opportunity.
Quadrillion Capital's sector funds are not linked to or correlated with the stock market
COVID has created more investment opportunities in the US Middle Market, where companies can be acquired on favorable terms. However, the US Middle Market historically contains a large number of underperforming or undermanaged companies, due to a lack of available capital, more expensive capital, a lack of talent, and other factors.
The opening up of the US economy will benefit the Funds. First, investors will need to rotate money out of stocks and real estate given higher interest rates and higher rates of inflation as the economy opens up. This means our Funds will be more attractive to new investors. Second, we believe that expanding GDP will help us at the portfolio company level in terms of growth. As experts in pricing and price management, we think that we can work with companies to raise prices too so inflation impacts are minimized at each portfolio company
Each portfolio company is structured as its own legal entity in our funds. If one company should fail, it would impact investor returns, but it would have no impact on other companies we have invested in. In private equity, companies do fail for a variety of reasons.
The Management Team has worked as private equity investors, line operators, and advisors to companies undergoing rapid transformation for the twenty five years. Our private placement memorandum (PPM) has details on each person. A quick summary is:
- George Stelling (Partner) - Deep experience as a general partner of lower middle market private equity fund; leadership team member at NVIDIA, ON Semiconductor, and Franklin Mint; senior consultant / advisor at Bain & Company, Quadrillion Partners, and PwC. Advisor to Perot Investments.
- Krista Stelling (Partner) - Deep experience as a chief marketing officer and leadership team member at Arteriors, Wisteria, and Quadrillion Partners; Marketing leadership experience at PierOne Imports and OKA; Strategy Experience at American Express and Bain & Company
- Christopher Lombardi (Senior Managing Director) - Deep experience in private equity investing at H.I.G. Capital, Highland Capital Management, Great Hill Partners; Investment Banker at Credit Suisse.
- Robert Mahoney - Deep experience and subject matter expert in sales and marketing. Leadership roles at ON Semiconductor, National Semiconductor, Xicor, Altera, and other technology companies
We have more than 60 years of combined expertise in improving operations as investors, line operators, and advisors. At Quadrillion Partners, members of the leaderships team generated over $300M in EBITDA improvements in portfolio companies for investors like TPG Capital, Apollo Global Management, Oaktree, and CVC Capital. As line operators, the team has generated billions of dollars in enterprise value for companies like NVIDIA, ON Semiconductor, American Express, and others
Yes, the Management Team and their affiliated investors will invest in each Fund, side-by-side with all investors.