Entrepreneurial Paths Take Many Forms
We’re passionate about working with great teams and great businesses, and we started 37th & Moss to work with others who share this passion.
The path to entrepreneurship is highly varied and takes many forms. For some, the journey entails starting a business from scratch with a novel idea and a high threshold for risk. For others, a family business may seek a new generation of management, pulling a younger generation into the role of business operator. While for others still, investment in a franchise may result in a level of income that affords an individual the opportunity to pursue the side-investment in the franchise as a full time endeavor.
Depending on factors such as stage-of-life and risk appetite, the ideal timing for pursuit of entrepreneurship varies, as does the form of entrepreneurship one opts to pursue. Despite differing journeys, common across each entrepreneur's path is the goal of solving a problem.
The Problem We Seek to Solve
At 37th & Moss, our path to entrepreneurship includes interactions with businesses on a variety of fronts: working on a family farm, launching startups that grew from an idea to scalable revenue, launching startups that struggled to scale, advising businesses on corporate finance, solving high-risk, technical problems with high-performing teams, and managing operations for growth stage businesses. This unique journey shaped our collective entrepreneurial experience and highlighted that our greatest interest is in working with businesses generating less than $50 million per year of revenue. These businesses not only represent an important source of employment and productivity for the American economy, they face a problem that we believe we’re uniquely positioned to solve - succession challenges.
According to the US Census Bureau, over half of business owners are 55 years or older, suggesting that a large percentage of businesses are either navigating succession planning or will begin doing so in the coming years. Succession planning is an important step in the entrepreneur’s journey, especially for small business owners who are likely to have a majority of wealth tied up in a business. Based on the Census Bureau’s count of the number of businesses in the US, we estimate that hundreds of thousands of companies will face a succession planning scenario in the coming years. Some businesses will lack a clear family successor, while other businesses will lack a key employee who desires to finance the purchase of equity in a firm.
Among these lower middle market businesses, there are tens of thousands of teams with millions of individual team members. Many of these teams are well positioned to continue building on a legacy, pending successful navigation of succession planning. These companies include those that are beloved by customers, those that have strong cultures and those that are a key economic driver in a local community. While it seems evident that most good businesses shouldn’t have a difficult time coordinating a succession plan, the reality is that some of these businesses are too large for individual buyers, but may be too small for corporate buyers or private equity buyers. Or, should the owner desire that the company continue to operate as a standalone entity, the owner must determine how to create liquidity while incentivizing a new generation of leadership, but without selling the company to a buyer who may extinguish the brand.
For Us, The Timing is Right For Entrepreneurship Through Acquisition
As we assessed our own stage of life considerations at 37th & Moss and contemplated our next professional step, we concluded that our greatest desire is to stay on the entrepreneurial path. But we’d need to be thoughtful about the type of endeavor we pursued. Timing made the startup venture a challenge, even though it is a path we admire and that we have pursued previously. With the startup option sidelined, we were keen to explore an approach that solved a problem for business owners and that would allow us to be a resource to lower middle market businesses. The need for many businesses to navigate succession coupled with our desire to work with a lower middle market business pointed to entrepreneurship through acquisition as the best path for 37th & Moss.
Experience has taught us that the entrepreneurial path has no shortage of challenges regardless of business stage. Going at this alone would be difficult, thus 37th & Moss is a partnership formed with a foundation that we believe offers enduring support on a 10+ year journey. We desire to be good stewards for a team, a community, and a transitioning owner, and we seek to be long term operators of a high quality business, rather than short term investors. Our goal is to acquire a great business, then step in to operate that business.
Each entrepreneurial journey is unique. But common across the successful journeys are teams that enthusiastically solve problems. For us, the opportunity to work with these teams and to continue the legacy of a great business is the right next step in our entrepreneurial journey.
