Want to know what it takes to raise your first fund or how to evaluate if an opportunity aligns with your values?

In this second episode of Accessing the Pipeline, a McGuireWoods podcast for Black professionals in private equity and finance, hosts Rubin Pusha III and Greg Kilpatrick are joined by 5th Century Partners’ co-founders Jessica Patton and Bruce Hampton. Jessica is a Principal at 5th Century Partners, and Bruce is a Managing Partner.

During this episode, Jessica and Bruce walk listeners through their professional journeys. From earning their higher education at prestigious universities to running their own private equity firm, these two have a wealth of experience and knowledge to share.

They discuss their firm's investment strategy — which focuses on three main pillars — how their team came up with it, and what they look for in companies they plan to invest in as well as what they look for in limited partners (LPs).

As Black professionals who engage in fundraising, Jessica and Bruce do not shy away from discussing the value of diversity both internally at their firm, as well in the LPs and companies in which they invest. At 5th Century Partners, they are intentional about creating more opportunity and access where they can.

Tune into Part One of this episode to hear Bruce and Jessica share advice for those looking to raise their first fund and for other Black professionals who are interested in making a name for themselves in private equity.

Featured Guests

Name: Jessica Patton

What she does: Jessica is the co-founder and principal at 5th Century Partners. Throughout her career, Jessica has focused on bridging culture and technology by bringing more Black investors and founders into tech spaces. Jessica has worked with and advised companies at all stages of growth, most notably even starting her own company.

Company: 5th Century Partners               

Where to find Jessica: LinkedIn 

Name: Bruce Hampton

What he does: Bruce is the co-founder and managing partner at 5th Century Partners. Throughout his career, Bruce has represented more than $2 billion in enterprise value, completing several buyout transactions across multiple industry sectors.

Company: 5th Century Partners              

Where to find Bruce: LinkedIn  

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This podcast was recorded and is being made available by McGuireWoods for informational purposes only. By accessing this podcast, you acknowledge that McGuireWoods makes no warranty, guarantee or representation as to the accuracy or sufficiency of the information featured in the podcast. The views, information or opinions expressed during this podcast series are solely those of the individuals involved and do not necessarily reflect those of McGuireWoods. This podcast should not be used as a substitute for competent legal advice from a licensed professional attorney in your state and should not be construed as an offer to make or consider any investment or course of action.

This is Accessing the Pipeline, a podcast for black professionals in private equity and finance, brought to you by McGuireWoods. Join host Rubin Pusha III as he welcomes special guests offering insights into access and capital, deal making, accelerating portfolio optimization, and developing relationships among black professionals in the private equity industry. Tune in to access the possibilities.

Welcome to part one of our episode featuring Bruce Hampton and Jessica Patton from 5th Century Partners.

Welcome to accessing the Pipeline. Please join me and my fellow partner, Greg Kilpatrick, who's co-chair of our securities group, and myself, Rubin Pusha, partner in our healthcare and private equity group, in welcoming our guests today, Bruce Hampton and Jessica Patton of 5th Century Partners based here in Chicago.

All right, we'll just jump right in. We'll start with Jessica. Tell us a little bit about your private equity background and what led you to being at 5th Century Partners.

Great. Well, thank you for having us. Excited to be here and excited to share with everyone a little bit more about our story. I myself, born and raised in Detroit. I went to Howard for undergrad and majored in finance. I spent some time-

I'm at Hampton grad.

Oh. Okay. Okay. It's like yeah, let's see if he [inaudible 00:01:13] Yeah.

[inaudible 00:01:13]

I was like... I saw it so I was like, wait, what, what.

It's all love for the different HUs. But I spent some time, I started actually in private equity. I took a traditional kind of course during college. I spent time in the investment bank or a couple investment banks rather. And then I started at a first time fund that was focused on investing in consumer growth investments and had a really strong fundamental experience that I hearken back to today that allowed me to see a lot of different facets of first time fund though at a really junior space, but also more influential than normal, given a smaller fund there.

From there, I worked at a private equity backed food service company that was a $250 million-ish business backed by a middle market firm called Vestar, and got a real operating experience there, which I think is also fundamental to my background and really having a lot of understanding and empathy for what change looks like within a company, not just what private equity investors dictate is what they want to see, but moreover, what does it require of the team to have change management and facilitate that change, especially in the family-owned company. Which is traditionally a lot of the companies that we will look at.

From there, I went to business school to Stanford and got my MBA and spent a couple of years at a well-known venture firm called Andreessen Horowitz, fundamentally investing in software and technology, but my nuanced experience there was building out a fund called the Cultural Leadership Fund, which was really focused on bringing more black people into technology from a very wide depth of different ways to get around that question.

And then I reconnected with Bruce and Marcus who were prior friends from a variety of different ways, but I would call it more so classified as people who I knew from a black finance industry perspective and have been growing and keeping in touch. And what they were starting was a really thoughtful private equity firm that I felt like matched with an alignment of my experiences, but also real values, had a real values and mission orientation that was exactly what I was looking for at that part of my career. So I joined them and got moving in late 2020. I'll let Bruce share the rest of the story.

Yeah, that's awesome. I sure we'll put a pin on your experience as an operator, as I'm sure we'll talk about that a little bit when he gets into how he assembled this inaugural team of 5th Century Partner leaders. So Bruce if want to share a little bit about your background as well, and I think that'll be a good segue into the moment that you guys sat down and decided that you would start your own fund.

Yeah, sure. Happy to. And like Jessica said, we just want to thank the McGuire Woods team for having us here. I mean, it's an incredible platform you guys are building, so to have our story a part of it is something that we're proud of and look forward to being part of in the future. But to your direct question, Rubin, so I'm actually, I'm from the Midwest as well, so we have a Midwest contingent amongst our founding team.

I'm from Cleveland, went to Indiana University. I was actually a football athlete, so went there for undergrad and they launched my career back in the late two 2000s in investment banking, actually here in Chicago at JP Morgan. So it's been a couple years. I was part of the leverage finance group, which basically most of our clients were private equity. So that's really how I got my early exposure to the industry. And I like to joke and say I quickly realized that they were having a lot more fun than I was on my side at the table.

So since then I've really spent my career in private equity across the spectrum. So I've been at a larger firm. Firm that's headquartered down in south Florida called Sun Capital Partners. So I got to see how to execute this strategy at scale. And at the time they were probably one of the most active funds in the country, we're doing 30 deals a year. So really built the foundational skills to be successful.

Also spent time in a first time fund in Dallas, Texas called Gage Capital. So got really a peek behind the curtain of what it takes to launch a firm, raise money, set a strategy, build a team. So some of those things that, again, I've kind of drawn upon those experience to date, but that was one of experiences.

Went to business school at Harvard Business School and then before I started at 5th Century, I was at a firm here in Chicago called The Vistria Group, which in many ways rounded out at my experience because I got it to see, call it a fast-growing fire with a differentiated strategy, have a lot of success in the market. So when you pivot over to 5th Century Partners and you think about what are the ingredients you need to probably start a fund, I've saw that at scale to see what that looks like at a first time fund and then at a... Call it a rapidly growing, also minority owned firm, with the differentiated strategy.

So then how do you bring all that together? All those pieces I think fit really nicely in my experience. So it's been a good journey so far. We're excited to be here and tell you more about it.

Yeah. Well, obviously you're both super talented, excellent sort of academic pedigree and the same with your professional careers. And so I could see where in sitting in your shoes, I just ride out the wave. But evidently that was, that's not a part of your DNA. So what point, and I'm assuming that this all began to percolate during either leading up to or the early days of the pandemic. What was it about the market? What was it about your experiences that said, now is the time for a group of young black GPs to start fun?

Yeah. Maybe I'll start here. So for me, I think there's two separate categories of thoughts. There's personally what I was doing professionally and where I was in that journey. And then secondly, you mentioned the market, what was happening in the marketplace that could create an opportunity? So on the personal side, yes, I was in a very comfortable chair and doing really well at a very fast-growing firm, but I've always had this somewhat entrepreneurial itch to build something. Right? To do something that I can put my own thumbprint on. And in ways I've been able to do that throughout my career. But the idea of doing that by starting a firm I think was something that resonated with me. I think secondly, as I mentioned, all the different experiences I had, while they weren't as intentional as I describe them. As I look back, I quickly realize that I feel like I had a lot of what you needed and the experience and the relationships and the understanding of what it takes to be successful.

So bringing those together, I felt like on a personal level that it makes sense for me to maybe take that next step. You pan over maybe to the market. I think there are a couple things, and Jessica probably speak more about this too, but obviously 2020 was a tough year, a lot of things, issues being put to the forefront. But for me, I had seen a lot of those things and trends for a long time. Right? The world is becoming a lot more diverse. So you've got strong demographic trends around more diversity, more people of color becoming the majority in the United States.

You're seeing amongst the LP community and capital allocators, this need for just more diversity amongst their GPs, but then how they're reporting. So there's a lot of dynamics around the expectations of GPs and how they think about doing business. And then lastly, if you look at the family office community, which is actually pretty prominent in the private capital space, they're having their own generational challenges. They think about the gen twos and threes that are just more socially minded and responsible.

So you have all these factors that I think support, which is really call it a differentiated investment strategy that can look to capitalize on a lot of those trends, but also do a lot of the things that private equity's done for years, which is building great businesses, backing great people and creating opportunities through the company. And there was a lot there, but I think there's a lot of things on a personal, but also to market that made it make sense to step out of that country scene.

And if you could just, we'll get justice out of it here in a minute, but just to dive a little bit deeper, so we've got what you're seeing in the, we've got these themes that you've been seeing in the marketplace over the course of your career, and then we've got what's going on with you personally. What were those conversations like? I mean, take us to the moment and you pick up the phone and you call Marcus and say, "Hey, I think it's time that we do this," and what were those immediate next steps in forming your thought.

And just to give you some color, what I'm trying to get at here is that I think that what we're starting to see is some growth in the number of black-led or black emerging managers. I'm thinking about more of the growth stage companies, not VC. I think we've already, we have seen a lot of growth from the VC standpoint, but we don't see a lot of people that look like you on this side of the aisle. And so I'm trying to give some color to our potential listeners as to what this process is. What kind of state of mind do you have to be in to say, "Okay, I'm going to leave my good job, I'm going to start a fund and I'm going to get out here and start raising money." And when you're thinking about who you do that with, it isn't just... We're all, we're fraternity brothers, you don't just necessarily start calling your fraternity brothers, "Hey, let's do this." You think very strategically about it. So I'm just trying to get a little bit behind the lens, behind the curtain to hear what was your thought process like at that point?

Yeah, that's a good question. So a couple context points I'll throw out there to start, one to your point around this, it's tough. Right? So I actually on the personal side, me and my wife were expecting our first child who was actually born January 3rd, 2021. So right at the same time we lost 5th Century. So there was some real conversations around, do you want to do... You think this is the right time?

But I think it speaks to the conviction that I had. So yeah, those conversations for me looked like one, if you want to do something and build anything, it really is about the people you partner with. And Marcus is somebody who is from Cleveland as well, probably saying neighborhood. We've known each other for some years now and I had a lot of respect from him, grew up in finance, but had been a CEO of a company and has success doing that.

So for me, I saw someone that similar neighborhood, a lot of core values, really young, successful. So there's a lot of great intangibles, if you will, that I saw that were also complimentary to my experience. Right? I've just been a pure play investor and someone who's had investing and operating, I knew that was the core we would need to step out to execute our strategy.

So there was a combination of partnering with somebody I was familiar with, trusted and knew that had a lot of experience, had a lot of conversations with people in my network. I think it's on us, which is why I love this platform you guys have. It's like the black ecosystem, we should be sharing ideas and thoughts more. And I had conversations, I won't name names, but you call it some of the most successful black GPs there are in the country, billions of dollars of AUM and had conversations about their journey of starting a fund and when did they think it was the right time and did this idea make sense?

And I think we all came to the conclusion that the market was right for this type of strategy. It seemed like we had the requisite experience to build a team. It was really just about to your point, can you stomach some of the ups and downs and the time that it might take? And that's more of a personal decision that you've got to grapple with. And for me, I know I joked a little bit, but have a very supportive wife who honestly said, I don't know why you keep thinking about this. You've been preparing your entire life and career. All the things, all the work you've done is for this moment. So it's here for you, capture it.

So Jessica, you talked about this just a little bit about what attracted you to the opportunity, but where do you believe you fit in the strategy and what you guys are trying to accomplish at 5th Century Partners?

Yeah. One thing I'll say before going to the strategy and the work that we're doing is I think that's most important to me in the work and the people that I work with and taking risks, I share a lot of and underline a lot of what Bruce shared is really values alignment and the people that you're working with. And I don't think that could be under-compensated because any founder journey or starting anything is it has a rollercoaster, it has ups, it has downs, it has peaks, it has valleys, it has different things. But I think that given mission alignment of our team and knowing each other and knowing why we're doing this helps with every moment of that. And it's what we come back to centrally. And what continues to make me excited is about we're building something that's bigger than ourselves. It's not about us going out and making billions of dollars.

It's about for us the mission alignment, which is really around how to bridge the equity gap, especially for communities of color. So we see something bigger than ourselves and we're attract to something bigger than ourselves. And we constantly talk about that and that's why we came together. And that's really important.

For my particular kind of differentiation with the team. I do have a myriad of experiences which I think put me in a very differentiated place like at the firm and with a different vision. Bruce has a much more traditional, or call it private equity finance background. Marcus has some of that, but has a real core operator experience as a CEO of a company for over eight years in lower middle market. And we invest in lower middle market CEOs all the time. So it's really great for him to be able to be that voice.

And I share a little bit of both in addition to a DNA of thinking about the importance of ecosystem building, which is something along each point of my career as I picked up things, I picked up fundamental private equity experience. I picked up fundamental operating experience within private equity back companies. And in my venture experience at Andreessen particularly understood the impact of having a strong network and what we call ecosystem and building that around to help serve the firm in a differentiated way because something I'd say I've both taken from my personal life but also learned in my professional life is that networks catalyze everything and you can have a network effect effect effectively for the firm if you intentionally build it as such.

So early days, we really thought about what does it take to be successful? It takes transactional experience, understanding how to build and structure a deal really well. It takes understanding how to partner with operators and building a really strong key network of operators and it takes a really strong fundraising engine and most of those things deal with the people and none of us is going to have every point of expertise, that's just what it is.

So we set out to do a couple of things. One, be really intentional about how we're having conversations and not only choosing investors that were capital, but investors that were going to be strategic capital. Of course you don't always have... you can't pick and choose always your partners, but we really have been lucky and I think we went out intentionally looking for people that were going to be strategic ads on that side and really having dynamic conversations with our LPs, not just having that quarterly touch base, but having conversations asking them intentional questions, building an advisory group and going to people ad hoc to have conversations to seek out advice because we are younger. That's just what it is. And I think that provides some strength and some differentiation, but we also have a lot of people we can seek advice from who've seen different markets, who've seen different things that we can touch base with.

But moreover, from operator point of view, our ability to be successful in our companies is really dictated by the levels of expertise that we can seek out through multiple different people. So we from day one, started thinking about who can we surround ourselves around that can be really thoughtful. Sometimes that's like sourcing and deal flow, but also frequently that's like who can add value to our portfolio of companies or who has this particular lever of expertise that we can tap into?

So we built an operator advisory council really early on, which consists of over 20 people that we just tap into from different levels of expertise. And it's not overly formal or formatted, but it's to say we really value your expertise. We want to stay close, we want you to be a big part of... We know you'll be a big part of our success. We want to bring you onto boards as our C-suite opportunities that match your expertise. We want to be able to find that win-win for both of us. And we've been really successful at doing that. And we have some case studies within our portfolio where we brought in a CEO who was in that operator advisory council network and that it's a bring hearkening back to what do I bring that's differentiated. I think having this multifaceted understanding of how things work across those different pieces that I mentioned, operator, transaction, portfolio, company, et cetera. But then building the network to support that is how I think about the differentiation of work and how I tap into different things at different points in our building and the work I do daily.

So you talked a bit or you've mentioned your investment strategy, but let's dig a little bit deeper on that. What is your investment strategy? How did you come about it? What concepts do you prioritize? Just talk a little bit more about the fund and the type of companies you invest in.

Great. So yeah, at a high level, we're a lower middle market controlled buyout investment strategy. Generally we talk about trying to invest at the convergence of three factors, which we feel like we're uniquely equipped to help companies be successful. So one is industries that we know and have deep experience in. So for us, healthcare, business services and consumer services, again, those are really big industry verticals, but there's certain sub-sectors where we spend a lot of time either investing, in Marcus's case operating, in Jessica's case operating other members. But we to never want to show up and just be capital to a partner. We want to come in and really know the industry jokes and the people and the ecosystem well so we can be value added. So it starts at is this a industry that we know how to experience?

The second, which somewhat is a size parameter, is we think the lower middle market is where there's outsize opportunity for growth. So for us it's generally businesses that are, call it sub 20 or 25 million of EBITDA, which you probably see in those businesses is we're the first institutional capital. A lot of times it's a founder, owner, operator, I call it chief everything officer, where there's a real playbook around how do you professionalize, build out a team, implement systems, build out a board, et cetera, things that they haven't done before. So again, generally solving for size can kind of hit on a lot of those parameters. So that's the second thing.

And the third, which is really where I think we're differentiated and where there's real opportunity for outsize performance is where we believe we can harness diversity as a strategic advantage, and that's across the investment continuum. So what that means, I'll start with what it doesn't mean. So it doesn't mean that top of funnel, we just look at businesses that are minority owned or led. Of course we love, great if they are and they meet the criteria, we're more than happy. We have a couple in our portfolio, that's great. What it means more so is that if there's a company that is a great healthcare business, that $12 million of EBITDA that a lot of firms will look at, it's like, well, how are we different than the other 20 firms that are looking for that same type of asset?

So how we harness diversity across the continuum, can be upfront at sourcing. So given our connectivity to different ecosystems, this ecosystem as what Jessica talked about, we're very intentional how we curate those relationships. We're able to get proprietary looks at deals that could be minority owned or not, but that fit the size and the industry parameter. So sourcing is one aspect of where we think diversity can be a strategic advantage.

A second area is really around human capital. So a big opportunity, as I mentioned in most of called lower middle market businesses is to really build out and professionalize a team at the operating level, but also the board. So we're going to be doing that work anyways, but as part of what Jessica does, we're building relationships with great talent, talented folks, industry experts, but also diverse folks. So women, people of color, et cetera. So when we're building out the C-suite of a company, first and foremost, we're looking for the most qualified person, but it happens to be a lot of times it might be someone in our ecosystem that's a woman that's African American, that's a Latinx, et cetera. Essentially we're building out not just a great talented team, but a diverse team that we know is going to position that company for long-term success.

Then the last piece where it may come into play, and these are not ands, these are ors. Sometimes it's not sourced proprietarily through or it's not the human capital. It could be just our ability to build some unique strategic relationships. So there are some cases where if it is a minority business, there could be some MBE opportunities. We're cautious about how we pursue that, but that could be one thing. Quite frankly, there's just opportunities given our connectivity to Fortune 500 companies and the leaders there to be able to just unlock doors, open up doors for our companies to get at bats, whether it's directly linked to some minority contract, probably not, but it is just our ability, again, to give them outsized looks that they probably otherwise would get on their own. So hopefully that helps clear it up, but it's pretty much a tops down industry from a size and then where we think where do we have the competitive advantage along the investment continuum? We'll try to activate our tools, if you will, to give us that advantage.

And when you're winning, when you're trying to win a deal, 2021 was a very competitive environment. It continues to be. Are you seeing portfolio companies or potential companies buy into your investment strategy? They recognize the advantage that you can bring. Is it all about money at the end of the day and multiples? How are you seeing the marketplace and do you think your approach has made a difference in your ability to win transactions?

Yeah, I'd love to start, and Jessica probably has some good examples from companies in our portfolio, but look, absolutely, people care about money at the end of the day, right? So I'm not suggesting that we can have all these other connections and they love the strategy and the mission alignment and then we're three turns off everybody else, so that means we're going to win. That's not the case. You've got to be competitive, which again, we try to be and underwrite that way.

But we have seen is again, to my earlier comment about demographic and generational trends, that next rung of leadership when someone is, it is a family owned business that's been ran for someone and they're in their 70s now and they're handing the keys to the next generation, whether that be a family member or not, that next generation cares a lot about, okay, well who are the type of investors? What do they care about? Are they plugged into things around... We do a lot of things, not just diversity, but things around wage equity and stuff... Like how tuned in are they into culture and team building. Those type of things matter to that next [inaudible 00:25:08] of people. So that that's one thing.

Secondly, some of our business, given the product or service or nature of that other product or service, they see growth opportunities and call it more underserved communities. So if they can partner with a firm who might be able to help them unlock that consumer demographic in a more deeper way than they have historically, they see value in that. So for us, yes, we have to be generally in line with the market. We still, if we can source things on a proprietary basis, we might be able to get things for, I would call it more attractive valuations. But there is something about how we show a younger, hungrier team, more diverse caring about things than just the ultimate bottom line, that has allowed us to differentiate ourselves amongst a very chronic crowded private equity landscape.

And does the same... We'll turn a little bit to the fundraising process. Does the same thing hold true when you're going after LPs? Do they buy into your strategy because of the diverse team? And I mean clearly they buy into your strategy, but what are you seeing as a winning combination when you're bringing on LPs?

Yeah, Jessica, you want to-

Yeah, I can in a couple of things. I would say rounding out on the operator piece or portfolio company piece, I do think authenticity really resonates, but it's also, I use overuse this analogy potentially, but I do think people understand it's a marriage and they want to be married to someone that is aligned with how they see the world and what they want to see in the future. And if they can have a winning alignment of getting the transaction that they're looking for and getting the right value aligned with someone that believes in something a little bit deeper that is very competitive and differentiated in a market where there are a lot of similar looking firms, and I'm not just saying similar demographically, I'm just saying similar in the types of things that they invest in and in the work that they do operationally. So I do think market competitive advantage really sticks out when we find alignment with the right teams, which happens more than I think most people would expect or would even think.

On the LP side I do think there are a lot of similarities and analogies, but from a very differentiated point of view, because obviously we're investing in portfolio companies and LPs are investing in us, but when we think about when we came to market some things that really differentiated... Well, first I'll take a step back and say you never fully know why someone's investing in you. They don't invite you to their investment committee, you have some hints, they'll share some things. So you, let's just put that on the table to just say, it's like when you get into college, you never fully know what happened during that meeting. But some things that resonate and things that are remarked by our investors is I think definitively our experiences and the people that they've backed to come into the fund. We just look very differentiated from a team demographic standpoint, from what we've accomplished up to now. And it's not just about skin color or skin tone, it's just that our ability to come together as people who have complimentary functional experiences, our ability to build out a team and a thoughtful strategy, opening strategy in the time that we've been able to do it are pretty differentiated in the market.

I think our strategy, having really what I would call alignment around more social responsibility, aligned with having or focusing on a commercial return is pretty differentiated in the market because sometimes when you see some having some focus on a positive impact or social responsibility with a fund, that can mean lower returns or concessionary returns rather. And that is by no means our goal. We think you can align and do both. I think that's pretty differentiated. And yeah, I think it's the strategy holistically, people seeing that there's a real market opportunity for what we're building, which hearkens back to our early conversation.

We set out to do all these things and the reason why it was time to go was not only our complimentary experiences that coming together because there's a market opportunity, there's truly not a fund that necessarily looks like us and we do a lot of work. We try do competitive analyses or we'll kind of search in the market because it's not in our interest to be the only fund that does the type of work that we do. We want to support other GPs and see other people in the market because no matter how much AUM we have, we can never go after what I see as the market opportunity that we're pursuing, which is really matching a purpose-driven element to our work, to great partnership with founders and leadership teams. But effectively that's a lot why a lot of people involved are involved. And the other thing I'll add that hearkens back to something I mentioned is that is also why I think that we've been able to attract a differentiated set set of LPs that are not only just financially driven, they are financially driven and that's important, but they're also people who are willing to step beyond that. They'll provide strategic advice, they'll hop on the phone, they'll talk through things because they see an interest in wanting to make this a winning strategy beyond us.

One of the points of this initiative is each one, teach one. As Rubin indicated earlier, the emerging manager's market is growing, especially when it comes to people of color. And so one of the things we want to make sure folks who are listening to this get out of it is some teachable moments from you. A lot of folks are out there trying to raise their first fund and it's hard. And so you had anything that you wanted to tell those folks who are in that process, what would it be?

Yeah, there's a few things. So I'll start with what I would call table stake stuff, but people should know it, right? Then this is what you're going to encounter. Which is one, obviously track record is always the number one thing that comes up. Obviously we've had roles at different places and we might not have the... we didn't have the deepest track record to start, but there were very references, if you will, of whether things that I've done in prior fires and people who are also LPs in those funds can say, "Oh, I know that deal. I know the role that you played and I know the people that can vouch and et cetera." Or in Marcus's case, have generated value for two private equity firms as the CEO of a company. So I think starting with track record is obviously the number one thing.

The second thing that LPs typically look for is teams that work together. And I think to be frank, that's probably one of the things that we had to overcome because as if you want to create, call it a more diverse team, I don't know where they're going to spin out of because there's not many diverse folks in at the largest private equity firms to ever spin out of. This isn't the five people that work together that... So it's impossible, but that is something that does get raised. But I would say the couple things that I would highlight that go beyond the table stakes are two things. One, really the need to have capital before you get raise capital. So I say that because many cases, the journey to raise could be 12 to 24 months, and you've got to basically build a team and infrastructure. It's a circular issue because you're like, man, if I can get to the end game, then I can build the office and hire all the people to show you that we're a real viable thing.

But of course you got to show a lot of that before you ever... before you probably can get it. So there's a need for real capital to start something. Secondly, that maybe this covers a surprise or not, but there's a hefty amount of your own capital that that's expected to be invested alongside the LPs as part of the GP commitment. And these are not trivial amounts of money. So again, I think this real understanding we talk about when you're ready, I think there's also just are you ready from a personal balance sheet perspective to do that, because there's a real commitment that's needed.

That concludes part one of our second episode of Accessing The Pipeline featuring Jessica Patton and Bruce Hampton from 5th Century Partners. Stay tuned for part two that will be released in the next week.

Thank you for joining us on this episode of Accessing The Pipeline. To learn more about today’s discussion, please email host Rubin Pusha III at rpusha@mcguirewoods.com. We'll look forward to hearing from you. We'll look forward to hearing from you. This series was recorded and is being made available by McGuireWoods for informational purposes only. By accessing this series, you acknowledge that McGuire Woods makes no warranty, guarantee, or representation as to the accuracy or sufficiency of the information featured in this installment. The views, information, or opinions expressed are solely those of the individuals involved and do not necessarily reflect those of McGuireWoods. This series should not be used as a substitute for competent legal advice from a licensed professional attorney in your state and should not be construed as an offer to make or consider any investment or course of action.