What if environmental, social, and governance commitments weren’t just a source of portfolio-wide profits, but also a way to source acquisition targets before competitors get wind of the opportunity? That’s the wager private equity firms like VSS Capital Partners are making in tapping talent with access to typically overlooked sourcing pipelines. VSS’ newly appointed strategic partner and serial entrepreneur Dr. Sabrina Kay talks network and impact with us in today’s column.
Proprietary deal sourcing networks get a lot of billing on marketing materials as sponsors jockey to differentiate themselves in a high valuation environment. The recurrent question, ‘How do you get your edge?’, gets parried away with arguments about geographic breadth, dedicated business development teams, and sector focus that plugs GPs into top operators’ workflows.
But what if those operators can leverage sector contacts traditionally underrepresented in PE’s business development outreach? “I have been mentoring female entrepreneurs for a long time and was a female founder when ‘female founder’ wasn’t even a name,” says Dr. Kay, who’s five previous entrepreneurial ventures give her a deep rolodex of women executives across the education, fashion, and tech sectors.
“It’s not because I think women-led businesses need more support; I think it’s a diversity issue. Different backgrounds and thoughts really bring better business results.”
Diversity is often positioned as a marketing effort or a superfluous benefit alongside returns, but bringing in savvy operators can move the needle at both the firm and portfolio level. VSS’ focus on tech-enabled businesses, healthcare, and education provides fertile fields for an ESG approach.
“VSS’s investment focus on small, growing businesses in education and healthcare services fits very well into the broader ESG framework — both from the perspective of being able to drive social impact and enhancing growing businesses’ governance,” Dr. Kay says.
Dr. Kay emphasizes that any investment opportunity has to make financial sense first. Perhaps the industry is growing into ESG practices ever more rapidly.