This week, the Colorado Springs Gazette published the following op-ed from American Investment Council (AIC) President & CEO Drew Maloney regarding how private equity investments have helped support small businesses in Colorado and across America as they recover from the effects of the COVID-19 pandemic. In honor of Small Business Saturday, the piece specifically highlights three small businesses in Colorado that have benefited from private equity investment. Read the full op-ed below:
Private Equity Supports America’s Small BusinessesColorado Springs GazetteBy Drew Maloney, AIC President & CEO November 23, 2021 The Saturday after Thanksgiving is traditionally reserved to celebrate small businesses and encourage shoppers to patron their local hometown stores. This year’s holiday is especially important, as many small businesses here in Colorado and nationwide are still struggling to keep their doors open after the devastating economic effects of the COVID-19 pandemic. Fortunately, private equity investments are helping drive America’s economic recovery from COVID-19. These investments are critical for small businesses who need partners to survive the pandemic, or those that simply need outside capital to grow and hire new workers. In fact, 86 percent of all private equity investments supported 14,000 small businesses with 500 or fewer workers as of 2020. Roughly a third of these small businesses employed 10 workers or less. Black Rock Coffee is a small coffee chain with three locations here in Colorado. Like many other food service businesses, Black Rock Coffee struggled to adapt and survive when the COVID-19 pandemic forced businesses to shut their doors or adopt strict safety protocols to slow the spread of the virus. Fortunately, Black Rock Coffee had a committed partner in The Riverside Company, a private equity firm who provided critical capital and expertise to help the business weather the pandemic. According to CEO Jeff Hernandez, “(Private equity) stuck with us. They saw through the madness and chaos of everything going on in the world. They saw that connection our customers have to our brand and our baristas was almost unshakeable and they followed through and made that investment.” Black Rock Coffee has since grown by more than 20% annually and is competing successfully against more established national chains. Private equity has also become a major supporter of businesses and workers here in Colorado. As of 2020, private equity has invested $32.5 billion across Colorado, supporting more than 222,000 jobs at 547 businesses. The Pad hotel and hostel, located in Silverthorne, is a unique lodging concept built around promoting social interactions between guests, outdoor enthusiasts, and adventure seekers. Private equity played a critical role in securing the capital to finance and build the boutique 36-room lodge. It is now taking reservations and has become a hotspot for skiers and white-water rafters. Businesses and their workers aren’t the only ones who benefit from each private equity success. 85 percent of public pension funds nationwide invested at least part of their portfolio in private equity. These investments delivered a ten-year median annualized return of 12.3 percent, exceeding every other asset class available and played a key role in strengthening the retirements of public workers. The Colorado Public Employees’ Retirement Association’s private equity investments returned 20 percent in 2020, supporting the hard-earned retirements for the employees of more than 500 state and public entities. Private capital has provided critical support to many biotech and pharmaceutical companies that need capital to begin the expensive and time-intensive process of researching innovative cures and technologies. Westminster-based Spinal Stabilization Technologies develops devices that alleviate common causes of lower back pain. In 2016, the company partnered with private equity and expanded its capabilities, creating new spinal technologies and opening an additional office in Boulder. Earlier this year, the company announced it had received the FDA’s breakthrough designation for its PerQdisc™ Nucleus Replacement System, which helps stabilize the spine in patients with damage to their lower back. According to CEO Mark Novotny, “Without private equity, there are millions of patients that would never have the chance to benefit from the end result of all this investment and innovation … Private equity helps develop technologies that help people.” Private equity is proud to celebrate small business Saturday. Whether it’s your local morning coffee shop, a trendy new hotel, or an innovative biotech startup, private equity is making sure that small and startup businesses across Colorado have the partner they need to grow and support more jobs. Drew Maloney is president and CEO of the American Investment Council. He previously served as the assistant secretary of the Treasury for Legislative Affairs.