Richard de Silva, founder and managing partner of Lateral Investment Management, joined Giovanni Amodeo for a fireside chat to discuss his journey and insights on investing in bootstrap companies. Here are the key takeaways from their conversation:

Early Days and Bootstrap Experience: Richard de Silva shared his background as a bootstrap founder, starting IronPlanet, a heavy equipment marketplace, in the late 1990s. This experience shaped his views on investing and partnering with founder-owned businesses, particularly in the private equity space.

Lateral Investment Management’s Focus: De Silva emphasized Lateral’s focus on middle-market buyouts, specifically targeting founder-owned, bootstrap companies with $25 million to $200 million in revenue and a minimum of $5 million in EBITDA. They invest in businesses with a growth rate of 10-20% and seek to transform them into scalable, technology-based companies.

Investment Approach and Deal Sourcing: Lateral’s investment approach is characterized by a human capital-intensive strategy, with a focus on partnering with founders and supporting their growth ambitions. They originate deals through proprietary outreach efforts, tracking 100-400 companies within 10 sub-sector themes, and building relationships with entrepreneurs over 12-36 months before making an investment.

Post-Investment Support and Data Management: De Silva highlighted the importance of post-investment support, including hiring local talent, training, and distributed company structures. They also collect and manage data on their portfolio companies to identify trends and opportunities.

Brand Evolution and Future Aspirations: Lateral’s brand is built around the concept of “lateral thinking,” emphasizing customized solutions and partnerships with business owners. De Silva aspires to expand the brand beyond the US, potentially adapting the messaging to better resonate with international markets. His ultimate goal is to create a firm that is the go-to partner for bootstrap family-owned businesses, fostering wealth creation and community growth.

Key timestamps:

00:08 Introduction to ION Influencers Fireside Chats
00:46 Richard’s Journey
01:59 The Niche of Bootstrap Investing
05:31 Lateral Investment Management’s Unique Approach
09:12 Investor Concerns and Scalability Challenges
10:38 Investment Criteria and Focus Areas
11:55 Geographical Advantages and Disadvantages
15:56 Transaction Origination and Relationship Building
17:37 Data Management and Portfolio Operations
18:32 Future of Founder Relationships in a Tech-Driven World
20:14 The Evolution of the Lateral Brand
21:49 Understanding Investment Hesitations
24:32 Evaluating State-Level Opportunities
26:23 Vision for Future Growth