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Sleeping Giant Capital co-founders Doug Lepisto (left) and Derrick McIver. Sleeping Giant Capital co-founders Doug Lepisto (left) and Derrick McIver. COURTESY PHOTO

Greenleaf Capital invests $10M to scale up Kalamazoo fund for entrepreneurs; new committee to focus on women in leadership

BY Monday, May 16, 2022 01:46pm

A Kalamazoo-based investment fund that also looks to cultivate and support a new generation of entrepreneurs who want to own a business will use a $10 million investment to scale operations.

Sleeping Giant Capital LLC, formed two years ago by two Western Michigan University business management professors, closed on the funding from Kalamazoo wealth management and investment firm Greenleaf Capital Inc.

The funding gives the financial support for key areas such as covering the salary and other costs for up to four professionals’ residencies, hiring two full-time executive employees and offering paid internships for undergraduate students, and paying for office space in downtown Kalamazoo for executives-in-residence, advisers, and undergraduates.

“This is a real pivot point and acceleration point for us,” said Doug Lepisto, co-founder and managing director of Sleeping Giant Capital. “This really helps us fulfill our mission, which is empowering the next era of business leaders here in West Michigan and this funding really accelerates that and makes that possible.”

Lepisto formed Sleeping Giant Capital in the summer of 2020 with Derrick McIver. Both are associate professors of management at WMU’s Haworth College of Business and co-directors at the university’s Center for Principled Leadership and Business Strategy.

The firm’s Sleeping Giant Capital Principled Impact Fund targets investments in companies with $1.5 million to $4 million in annual cash flow.

The fund operates with a unique model that goes beyond generating financial returns for investors. Investments support prospective owner/operators buying a company who go through an eight-week program, known as Acquire, that the WMU Haworth College of Business launched last fall. Acquire trains WMU masters of business administration students and experienced business professionals to become owner/operators, who are then connected with a network of experienced advisers and mentors.

The $10 million investment to scale the firm comes as an entire generation of small business owners are hitting retirement age and looking to sell and exit the business.

The model behind Sleeping Giant Capital offers a “locally based, integrated solution to a fundamental problem that every American community is going to face, which is the generational shift in small business ownership,” Lepisto said.

“As historic numbers of baby boomers retire, the West Michigan community faces a once in a generation question,” he said. “What is the future of small business ownership? Will ownership and capital flee to the coasts? Who will lead and grow these companies? Will they operate with a bias to the short-term, or consider long run prosperity? What kind of community member will they be in West Michigan?”

Jonas Peterson, CEO of economic development organization Southwest Michigan First in Kalamazoo, said the “historic transition of business ownership presents an opportunity to keep capital and ownership within the West Michigan community.”

“We need the next generation of business leaders who drive growth and innovation in our small businesses,” Peterson said. “Sleeping Giant Capital is enabling an exciting path of entrepreneurship that is based locally.”

Sleeping Giant Capital seeks to raise $50 million for the Principled Impact Fund. The firm closed nearly a year ago on the first $21 million of that goal, and Lepisto expects a final closing in fundraising to occur in June.

The firm last June also made its first investment, which went to industrial sales company LineDrive that was acquired by WMU alumnus Michael Abdella.

Lepisto expects the fund to close two transactions this year and said “several” potential deals are under letters of intent. Sleeping Giant Capital has a “very strong” pipeline of both potential deals and prospective entrepreneurs to work with, he said.

Sleeping Giant Capital intends to hold investments for the long term, perhaps up to 25 years.

“We’re not here to buy and flip,” Lepisto told MiBiz. “Given a number of factors, we believe that this will provide better financial returns over the long term to our investors because you don’t have the fees of redeployment, you don’t have the time where the capital is on the sideline waiting to be deployed, you defer taxation, you can exit at the time it makes sense, and you can stay in an investment if it’s going well. That kind of flexibility is going to generate great financial returns for our investors and it also creates incentives for us to think long term. We think that’s not only great for business, but great for the West Michigan business community.”

Sleeping Giant Capital recently brought aboard two executives-in-residence: Tom Garrett, who has 25 years of corporate management experience and previously served as president of Total Plastics Inc. that — under his leadership — grew from two facilities and $8 million in revenue to 18 facilities producing more than $125 million in annual revenue with 325 employees across 10 states; and Justin Murray, who most recently managed M&A activities for Stryker Corp.’s largest business unit.

Citing Stanford University data that indicate just 5 percent of people who acquire a business are women, the firm also created an 11-member Women Leadership Advisory Committee that consists of female business executives. The goal is to empower more women to become business owners in West Michigan.

The advisory committee features:

  • Kris Bahner, senior vice president for global corporate affairs at Kellogg Co.
  • Lynn Chen-Zhang, CEO of Zhang Financial and chair of WMU’s Board of Trustees
  • Sandi Doctor, president at Northwood Group
  • Michelle Eldridge, co-founder at Clear Ridge Wealth Management
  • Sara Fetke-Sweers, assurance director at BDO
  • Jennifer Lentner, senior director of marketing communications at Stryker
  • Jen Randall, co-founder and CEO of Maestro eLearning LLC
  • Leigh Ann Sayen, president of The Peterson Co.
  • Nancy Turtle, Kalamazoo community bank president at Mercantile Bank
  • Tracy Thurkow, global head of behavioral science at Bain & Co.
  • Elizabeth Weindruch, managing director of private investments at Barings.

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CORRECTION: A previous version of this story incorrectly listed the source of the $10 million in funding. It is Greenleaf Capital Inc., not Greenleaf Trust.

Read 1435 times Last modified on Thursday, 19 May 2022 19:23
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