SBICs established, creating an industry | The Small Business Investment Act of 1958 allowed for the establishment of professionally managed investment companies, or otherwise known as SBICs. This law helped launch a new investment vehicle, creating virtually a new industry. Three years later in 1961, Northwest Growth Fund (NGF) was founded with a $1.2 mm capital raise making it one of the earliest participants in the SBIC program. Not only was NGF one of the earliest participants in the SBIC program, but its principals played a key role in the establishment and growth of trade and professional organizations that still exist today.
Growth and success, national footprint | In the 1970s, NGF made seminal investments in some of Minnesota’s most iconic companies and began to deliver solid investment results to its early investors. The early success of NGF was at a time of intense growth of SBICs, a time where many other SBICs failed. By the end of the decade, the firm’s evolution into a national investment powerhouse was in full force. By the end of the decade, the firm had more than tripled its total assets, expanded its deal-making capacity with key hires, and evolved into an investment powerhouse with a national footprint.
Taking risks, generating returns | NGF started to grow both in concept and geographically during the 1980s, and according to Business Week, NGF was the nation’s third largest SBIC at the time.To fund new investments, NGF raised its second fund, Northwest Venture Partners, a $60 mm offering. In the mid-1980s, the firm identified a new asset class called buyouts (“private equity”) and subsequently reorganized under a single umbrella entity, Norwest Venture Capital (NVC), with businesses focused on buyouts, venture capital and a combination of the two. The venture and buyout industry started to decline, but NVC was still eager for new capital and launched NEP IV, a $200 mm fund that at the time was the largest fund raised ever in Minnesota. This latest fund would pave the way for some of the firm’s most successful investments at a time when other industry players had left the market. The firm also started operating under the Norwest Equity Partners (NEP) name.
Accelerating recognition, enduring brand | The 1990s moved the firm to the national stage as its private equity business surged and investments in some of the decade’s Internet-related success stories took off during a memorable IPO market. The firm emerged as one of the most active and successful investment firms in the U.S., and in response to this success, NEP V was raised in 1994 with $300 mm. However, three years later, it was clear that venture capital and private equity had become two separate industries, presenting an opportunity for the firm to give each of their businesses their own identity and location – Norwest Venture Partners (NVP) migrated to Silicon Valley to be closer to the emerging technology market and Norwest Equity Partners (NEP) remained in the Midwest focused on buyouts. NEP launched NEP VI in 1997 with $350 mm and just two years later, raised NEP VII with $800 mm.
Stability and scalability, flexible investment charter | Favorable capital market conditions early in the decade led to the formation of a fund focused on mezzanine financing, providing new avenues of growth and flexibility. NEP introduced Norwest Mezzanine Partners (NMP) in 2000 with $250 mm for its first fund. Embracing the expansion into the sub-debt market as ready access to mezzanine financing was integral to help portfolio companies complete acquisitions to finance. In 2004, NEP launched NEP VIII with $800 mm and an additional $400 mm for its second mezzanine fund, NMP II. Four years later, NEP raised its largest fund to date, NEP IX with $1.2 billion while an additional $500 mm was raised for NMP III.
Making a difference, building for the future | In 2011, the firm celebrated a major milestone of 50 years, an anniversary unique within its industry. In addition to continuing to invest capital and helping great companies become industry leaders, the firm focused attention on building upon its solid foundation for the future – for both itself and its portfolio companies. In 2015, NEP and NMP raised their largest pools of capital to date – NEP X with $1.6 billion and NMP IV with $1.2 billion. Creating societal gains has always been a key tenet of NEP’s efforts – investing capital and resources to support our companies leads to significant job creation and revenue growth, both of which positively impact local communities and the economy at large. As we look ahead to more opportunities, NEP seeks growing and profitable middle market companies that need capital and resources so they can grow into even stronger industry leaders.
Relationships matter more than ever | NEP’s sound strategy of building businesses and extraordinary capital availability continue to collectively help support the firm’s ability to create growth opportunities, even during challenging times. Starting a new decade with unprecedented global dynamics shed light on the importance of relationships and resiliency, as well as flexibility. A new wave of investor and operations leaders joined the firm to help usher NEP into its 60th year of business, a celebratory 2021 milestone. NMP also celebrated its 20-year anniversary. A second office location in Southeast Florida opened to help broaden NEP’s reach to a robust market for growing and profitable companies – a true testament to the firm’s future growth ambitions.