A new series at AlleyWatch features New York City-based Venture Capitalists. In the hot seat this time is Mia Hegazy, Senior Associate at Catalyst Investors. Mia met with AlleyWatch to talk about growth equity as an asset class, how Catalyst adds value as a board member, the growing pains and common learnings for CEOs as companies transition from venture financing to growth equity, and much, much more.
Catalyst Investors Fund III successfully exited its investment in Ascentis, a leading provider of Human Capital Management (HCM) products including HR management software and payroll services to middle-market companies. Catalyst sourced the company directly through its network and has been a control investor with Tyler Newton, Susan Bihler and Chris Shipman as board members since 2012. Under Catalyst’s ownership, company revenues have grown from $10mm to $28mm, at a compound annual growth rate of 30%. Summit Partners is the new control investor.
Catalyst considers Pittsburgh to be one of the “lesser ventured regions” across the US and it has caught our attention. We have seen some of the most exciting companies spring up in areas outside of the traditional tech hotbeds. So why is a Pittsburgh (or an Indianapolis, a Salt Lake City, a Denver, a Portland, etc.) the perfect place to search for growth equity opportunities? And if you’re an entrepreneur in one of these regions, why should you call us? Read on!
“While New York may have started out being very media and ad-tech oriented, it has diversified and become very accommodating to VC investment generically,” says Brian Rich, managing partner of New York-based growth equity firm Catalyst Investors. “The community has been built up substantially. Major tech companies like Google are fostering a base of talented workers for start-ups in the New York area.”
Much has been written about “unicorns,” and rightly so – companies like Airbnb and Uber are game-changing, disruptive, and many will create extraordinary returns for their early investors. After the term was coined in 2013 by Aileen Lee of Cowboy Ventures, the market’s fascination with companies worth over $1 billion has been unbridled. That said, we believe a significant shift is occurring that will have long-term implications for valuations of high growth companies: that the market’s focus on growth at any price is fading and that investors are increasingly seeking a clear path to profitability.