IVCA Feature: New Member Profile of North Branch Capital

April 24, 2024

As the new member participants in the Illinois Venture Capital Association (IVCA) keeps expanding, the current membership are given new opportunities for networking, in addition to optimizing support and partnerships, which leads to guidance and new ideas for Venture Capital, Private Equity and support industries.

The latest new member is North Branch Capital, investing in Industrial Business with strong growth potential and seeking partnerships with strong leadership teams that have first-rate cultures.

The following is a Q&A profile with North Branch Capital, which explores the firm’s background and their expectations for interacting with the IVCA.

New Member: North Branch Capital
Representative: Neil Firlit, Chief Financial Officer/Chief Compliance Officer

IVCA: What is a brief history of and background on North Branch Capital?

North Branch Capital: North Branch was founded in 2014 to bring a better solution to the lower middle market Private Equity market. We partner with entrepreneurs to help them scale by combining extensive M&A experience with world-class operating experience. We are investing our Fund 2, which was raised in 2023. The team is continuing to evolve from its original three partners with nine professionals currently. North Branch has closed over 40 transactions since inception.

IVCA: Why did the firm decide to join the Illinois Venture Capital Association?

North Branch Capital: We wanted to further our networking opportunities and Private Equity advocacy in Illinois and nationwide.

IVCA: Your Private Equity firm focus is on industrial businesses, and going into partnership with ‘strong leadership’ management teams to build the business. You express direct North Brach Partner interaction with those teams. What advantages are evident in these direct partnerships?

North Branch Capital: Our team has had decades of experience scaling industrial businesses. We work with our management teams to identify investments and resources required to capitalize on growth opportunities, whether it’s people, systems, facilities or equipment.

While our management teams are great operators, they may simply lack experience and resources to take a business from $10 million in revenue to $20 or $30 million. Additionally, we have great experience finding and executing add-on acquisitions to further accelerate growth. Ultimately, the key to our approach is treating our management teams as partners and understanding where we can add value vs. taking a cookie- cutter approach to each company.

IVCA: There are a myriad of products that fall under the category of ‘niche manufacturing’ that is categorized as the firm’s investment criteria. What are examples of the companies and their products that define that niche?

North Branch Capital: Within our existing portfolio, a few examples would be …

Motions Solutions, which are engineering-focused company focused on linear motion products for precise applications within the medical and industrial technology markets.

Circuit Check, the advanced testing systems for printed circuit boards and other electronics.

Diversified Fall Protection, engineered fall protection systems

ControlByWeb, which are controllers or PLCs [Programmable Logic Computers] for industrial Internet of Things applications.

STARC Systems, the modular walls for occupied renovation applications.

Ultimately, the key ingredients for our investments are an engineered solution or other value-added capability that allows our companies to offer something differentiated within a large market … which would allow it to grow and capture market share.

IVCA: On your website you list several areas of the transaction oriented expertise that the North Branch operating partners assist with like Strategic Planning, Team Development and Growth Initiatives, as well as modern world considerations like Supply Chain and E-Commerce. What areas do the partners generally find needs the most focus in general and how do they approach it?

North Branch Capital: We approach each of our investments on an individual basis,  as in each company will have their own set of challenges and opportunities to address. However, we most often find inadequate investment in sales & marketing, systems, human resources and finance & accounting. As a result, we are often making investments and providing expertise in these areas of every business in which we invest.

IVCA: The IVCA is an advocate for Private Equity in both the legislative and general community … how does your firm help to promote the PE industry in general as a vital part of the business community?

North Branch Capital: The key is the way we work with our companies. We want to double or triple the size of our businesses – as such, we want to invest in our businesses in the form of people, processes, systems and facilities. A thriving business will aid the overall business ecosystem by hiring more people, improving vendor relations and ultimately better serve their customers’ needs with a clear value proposition.

IVCA: What does North Branch Capital hope to achieve in their interaction with the VC/PE community within the IVCA?

North Branch Capital: We don’t know a whole lot about IVCA, so we hope the networking and advocacy will create opportunities that we currently don’t have today.

For the website of North Branch Capital, click here.

Sponsors Ropes & Gray and Baker Tilly Present “State of the Debt Market” at the 2024 IVCA Spring Luncheon, coming up on May 8th, at The Chicago Club at 81 East Van Buren Street, Chicago. Click here to register and for more information.