New Atlanta private equity firm Garden City is gearing up for the “silver tsunami” of retiring business owners and planning new software innovations.
Former technology executive Michael Arrieta founded Garden City and recently closed its first, $51 million fund to buy and hold small- to mid-sized businesses owned by the Baby Boomer generation, a group near retirement age. By holding those companies, Arrieta plans to innovate new software that could make their industries’ operations more efficient.
Arrieta is targeting the “unsexy” businesses: the pool company, the tree removal service, the janitorial business. Garden City is about continuing family businesses and improving their profits through investing in technology and company culture and connecting them with a network of advisors, he said.
“These businesses are the backbone of America,” Arrieta said. “A majority of them you interact with every single day, or you see on the road, and COVID-19 has made ‘essential businesses.’”
Arrieta’s strategy attracted a list of notable investors and advisors, including SalesLoft CEO Kyle Porter, former Equifax CEO Richard Smith, former Boeing CEO Dennis Muilenburg, Intel CEO Patrick Gelsinger and football stars Tim Tebow and Drew Brees.
Garden City raised its first fund during a time in which national small business advocacy organization Project Equity calls COVID-19 and the silver tsunami the two biggest threats to small businesses around the U.S. Baby Boomers own half of the privately held businesses in the nation, according to data from Project Equity. In Georgia, that’s 78,300 businesses with more than 887,000 employees.
The new private equity firm also increases the local capital sources, a historic hindrance to Atlanta’s growth as an innovation hub, according to local tech executives. Garden City isn’t targeting tech-enabled companies or startups, but the holding and software development strategy could bring business expansions to Atlanta and create new, local startups.
The firm looks for companies with $10-$100 million in revenue and tends to write checks that range from $5-$20 million. Garden City has made two investments and will have two more by the end of the year, Arrieta said.
At each business, Arrieta hopes to build a workplace culture “like Chick-fil-A" to make employees feel respected and appreciated. He’s also planning to modernize the businesses by implementing technology that could make their operations more efficient.
His holding strategy also allows Arrieta to collaborate with the employees in Garden City’s portfolio companies to brainstorm software solutions geared toward their industries, creating a cycle of new, business-to-business startups. The workers would know what technology solutions would be the most useful to them, and Garden City could test those solutions internally before publicly releasing them. The firm is currently developing a new software based on its first company purchase.
Arrieta founded Garden City after a stint in Silicon Valley, where he worked for Wyse Technology, acquired by Dell in 2012, and DocuSign, which went public in 2018. Those successes gave him the runway to focus on his passion — small businesses.
