Why does Capstreet invest in automotive?
Capstreet backs technology companies that help automotive dealerships operate better. It says it has made several recent investments in this sector and wants to partner with innovative, growing businesses.
Capstreet states its view this way on its What We Do page:
With several recent investments in the automotive technology sector, we’re a thoughtful partner for innovative, growing businesses that are helping transform dealer operations. Within the automotive tech landscape, we target solutions that enhance sales, marketing, finance and insurance, and service lane operations for automotive dealerships.
The word to notice is “recent.” Both automotive companies in the portfolio are listed as current investments, so the firm is learning this market now, not looking back on it. That matters if you want a partner who already knows how dealers buy software.
The focus is also tight. Capstreet does not say it invests across all of automotive. It names dealer operations and four areas inside them.
What kinds of automotive businesses fit Capstreet?
A fit is a growing technology company that sells to automotive dealerships and improves sales, marketing, finance and insurance, or service lane work.
| Area | What Capstreet describes |
|---|---|
| Sales | Tools that help dealerships win and close customers |
| Marketing | Tools that bring shoppers to the dealership and its website |
| Finance and insurance (F&I) | Solutions for the finance and insurance office |
| Service lane operations | Tools that support the dealership service department |
| Customer | Automotive dealerships |
Compare your product to those four areas. A company with one clear job inside the dealership can fit, even if it also touches a second area. The firm’s criteria also apply, so check your EBITDA and your owner team too.
How do Capstreet’s criteria apply to automotive companies?
Capstreet publishes five criteria, and they apply to automotive owners the same way they apply to every other industry. Each one is listed below.
- Entrepreneur-owned businesses services companies
- $3 to $15 million of EBITDA
- Primarily majority investments
- Entrepreneurs reinvest alongside Capstreet
- Ability to apply the Capvalue Framework®
The firm also says it looks for “a tenured team of owners or managers seeking a majority capital partner, with solid financials, a defensive business model, untapped growth potential, and competitive advantages within their market niche.” Dealer software often sells on a subscription or recurring basis. A business with steady customers, solid financials and a defensible niche matches the defensive model Capstreet describes. Dealerships run on a few core systems, so a product that fits daily workflow can be hard to replace. That is our view, not a Capstreet statement.
Its $3 to $15 million EBITDA range sits in what many call the lower middle market. EBITDA means earnings before interest, taxes, depreciation and amortization. It is the profit measure Capstreet’s range uses. In a buy and build plan, the first business is the platform company, and later purchases are added to it.
Which automotive companies has Capstreet backed?
Capstreet lists two automotive companies in its portfolio. Both are current investments in Fund V. Status is shown as Capstreet publishes it on its portfolio pages.
- informativ: Current, Fund V. Credit report and compliance solutions for the automotive and general consumer finance industries. Its cloud-based products automate the consumer finance qualification process, with a heavy emphasis on compliance and identity verification for auto dealers and lenders. Founded in 2004 and headquartered in Frisco, TX.
- Protomiq: Current, Fund V. Formerly TradePending. Conversion-focused website tools for automotive dealerships across North America. The platform helps dealerships turn website traffic into sales opportunities through trade valuations, payment estimates, offers and service engagements. Founded in 2014 and headquartered in Atlanta, GA.
What does Capstreet do after it invests?
Capstreet applies its Capvalue Framework® in three steps: Research, Build Scalable Platform, and Drive Business Transformation. Across its history, the firm reports 50+ Platform Acquisitions and 200+ Add-on Acquisitions.
- Research. Perform deep research to identify markets and build relationships with key entrepreneurs.
- Build Scalable Platform. Invest in top talent and technologies, and provide functional expertise for scale.
- Drive Business Transformation. Develop a long-term strategic roadmap and execute a buy and build strategy.
Capstreet does not publish an automotive case study. The portfolio pages above describe what each company does today.
There can be no guarantee that Capstreet will be successful in applying its Capvalue Framework®.
Next step
If your company serves automotive, read the full deal criteria, then start a confidential conversation through the contact page. You can also call 713-332-2700 or email connect@capstreet.com. See all industries Capstreet lists.
Frequently asked questions
What automotive companies does Capstreet invest in?
Capstreet invests in automotive technology companies that serve dealerships. It targets solutions for sales, marketing, finance and insurance, and service lane operations. Owners should also meet the firm's general criteria, including $3 to $15 million of EBITDA and a team that wants a majority capital partner.
Does Capstreet invest in car dealerships?
Capstreet's published automotive thesis is about technology that helps dealers, not dealerships themselves. The portfolio shows software for credit reporting and compliance and for dealer website tools. If you own a dealership group, ask the firm directly before you assume a fit.
Which automotive technology companies are in the Capstreet portfolio?
Two: informativ, which offers credit report and compliance solutions, and Protomiq, which builds website tools for dealerships. Both are listed as current investments in Fund V. You can read each company's published description on its portfolio page.
Is Capstreet still investing in automotive technology?
Capstreet says it has made several recent investments in the sector and calls itself a thoughtful partner for growing businesses in it. Both automotive portfolio companies are listed as current. The firm invites owners to reach out through its contact page.
