Despite losing his Pacific Palisades home in the LA wildfires earlier this month, Doyl Burkett, Founder and Managing Partner of Los Angeles-based Integrity Growth Partners, said his firm is moving ahead on all fronts while it is believed to be approaching the finish line on a debut fund.
The seven-year-old growth equity firm launched its fund after building a track record backing software and tech-enabled services companies on a deal by deal basis. By early last year the firm had raised $77.9 million for Integrity Growth Partners II LP from 25 investors, according to an SEC filing.
Burkett declined to comment on the fund, believed to have a $200 million target. Despite the disruption caused by the fire—only Monday did Burkett, his wife and three children take possession of their rental home in Encino—Burkett said the firm continues to function well.
It’s not the first time Burkett and his firm have faced challenges. “This Palisades fire disaster process is the second most difficult thing I’ve experienced in my life,” wrote Burkett in a Linkedin post last week. “The ridiculously hard and harrowing period when we started Integrity Growth Partners was easily the toughest.”
That story began with Burkett cutting his teeth at Los Angeles buyout shop Aurora Capital Partners from 2000 to 2009 before later co-leading the growth equity practice at Kayne Anderson Capital Advisors. During his stretch there as partner and co-portfolio manager, the firm made more than 30 growth equity investments in the lower middle market. It also raised more than $700 million, largely from wealthy investors, via a series of four funds. By the end of 2017 Burkett was ready to launch his own firm. Eventually four former colleagues at Kayne Anderson Capital Advisors joined him—Partner Ryan Anderson, who had been a vice president at Kayne Anderson Capital Advisors; Principals Jake Crismon and Kasey Grabe, who had been senior associates; and Vice President Grant Shaffer, who had been an associate.
Early Test: At first Burkett felt confident the firm could raise a debut fund in relatively short order. It had a stable team that had worked together before. It had an investment strategy proven out at Kayne Anderson Capital Advisors. And on Valentine’s Day, 2020, the firm closed its first deal, giving potential investors confidence the firm could source and close transactions. But then the Covid 19 pandemic hit, the fundraising market tightened, and the firm was compelled to continue making investments on a deal by deal basis.
Major Progress: But Integrity Growth Partners maintained its footing, consummating enough deals without a committed fund to sustain the business. Since inception, the firm has backed seven companies, investing more than $315 million primarily on behalf of single family offices, multi-family offices, money managers and some large institutional investors. Its most recently added portfolio company, CoachCare, the second investment of the debut fund, lets hospitals and other healthcare providers provide patient monitoring and virtual care management.
Automated Sourcing: A hallmark of the firm has been its innovative approach to deal sourcing. In the tradition of growth equity pioneers Boston-based TA Associates and Summit Partners the firm reaches out directly to business owners rather than relying on investment bankers to make introductions. By leveraging artificial intelligence and automation, the firm identifies, researches, and tracks potential targets with exceptional efficiency. Tasks that used to be mind-numbing for associates are now streamlined and scalable. Emails to business owners—crafted to feel personalized—are sent in carefully sequenced campaigns, on average generating responses after 12 emails sent over period of 10 months. Senior rainmakers at the firm then take over cultivating the relationship.
Looking Ahead: Burkett remains optimistic about the firm’s prospects. In September the firm brought aboard Will Nuñez as principal of data and analytics to enhance the sourcing platform. “He is taking what we built, which was a Mercedes or a BMW, and making it into a Lamborghini,” Burkett said. The firm, he said, hasn’t missed a beat on the deal-making front, thanks to the depth and strength of its team.
In part because he secured adequate home insurance before the fires, Burkett knows that he and his family will make it through their current challenges. By contrast, during the darkest days of launching Integrity Growth Partners, Burkett said he was running up credit cards and going through savings. “What we’re going through now is easier than what we went through then,” Burkett said. “We didn’t know as a family and as a firm if we were gonna be able to make it.”