New Member Profile: Stack Capital
Photo: Stack Capital IPO Day, June 2021. (Left-to-right): Jimmy Viaopoulos (CFO), Jason Meiers (CIO), Jeff Parks (CEO), & Brian Viveiros (VP, Corporate Development & Investor Relations).
Our series profiling CVCA’s new members continues — providing insight into the organizations in our community.
We’re thrilled to profile a new CVCA member, Stack Capital.
Stack Capital is a recently formed investment holding company with a mission to democratize access into some of the world’s most innovative and disruptive, growth and late-stage private companies. The company has the flexibility to invest in private companies from various sectors before they become public; and the ability to continue holding them as public companies.
We caught up with Stack to learn more about its unique structure, the Stack team, and what they have on the horizon.
Tell us about Stack Capital, its history, role, and vision
Based in Toronto, Stack Capital Group Inc. (“Stack Capital”) (TSX: STCK) successfully completed its initial public offering in June 2021, raising CAD $110 million, and its core mission is to democratize access into some of the world’s most innovative and disruptive growth and late-stage private companies. By virtue of its structure as a public company, Stack Capital has eliminated the traditional barriers to entry into the private equity asset class, making this segment of the market available to all investors, in addition to providing them with a valuable form of liquidity.
Historically, the ability to participate in the private equity asset class has been restricted to institutional and accredited investors. The harsh reality is that accreditation rules eliminate roughly 95% of the investing public; meanwhile, even those that do qualify to invest struggle with being able to gain access to world-class private businesses and must deal with the risk of being stuck in a private equity investment with no opportunity to exit.
Simply put, most investors do not qualify as accredited, do not have large amounts of capital to deploy, and cannot afford to be locked into an investment for an indefinite period. Nonetheless, that should not mean that they cannot participate in this attractive segment of the market – Stack Capital is here to change the status quo, making the private equity asset class more inclusive, allowing investors to enhance portfolio diversification, and enabling them to build better portfolios.
Any investor, regardless of size or wealth, can own shares of Stack Capital and, by extension, gain access to a diversified portfolio of growth and late-stage private businesses. In addition, investors have the flexibility to hold shares of Stack Capital across any type of account including RRSPs, RRIFs, RESPs, TFSAs, and non-registered. With respect to liquidity, investors can buy or sell shares of Stack Capital in the open market, which is unlike most other private equity investments, where they are locked in for an extended period or restricted as to when a position can be purchased or sold.
How did the management team at Stack Capital come together? What were each of you doing beforehand?
Jeff Parks (CEO) is the main link across the management team at Stack Capital and was responsible for bringing the group together. Both Jeff and Brian Viveiros (VP, Corporate Development & IR) worked with one another over the past decade at a hedge fund Manager in Toronto where Jeff was a PM, co-managing three North American mandates, while Brian was engaged in sales & marketing initiatives across Canada. Jason Meiers (CIO) spent the past twenty years at TD Securities where he was a Managing Director, running internal investment mandates on behalf of the bank. During the past several years Jason built a strong relationship with Jeff, often working hand in hand on various investment ideas, despite being on opposite sides of the street. Jimmy Vaiopoulos (CFO) is a close friend of Jeff, and both attended Ivey business school together. Prior to Stack Capital, Jimmy was the CFO and interim-CEO of Hut 8 Mining, a bitcoin mining company listed on the TSX.
Without question, the idea of being able to bring an innovative investment solution to the marketplace, which democratizes access into the private equity asset class for the benefit of all investors, was extremely compelling to each member of the management team.
How has the first several months of existence been? What exciting developments can you share?
Over the past several weeks, Stack Capital has announced three investments that comprise its first set of attractive portfolio companies. The first was Varo Bank, the only fintech with its own US bank charter which operates without any physical branches (lowering the cost to serve), and offers a wide array of products, including loans, to its clients. The second was Bolt Financial, a global leader in the One-Click checkout process that connects thousands of online retailers with millions of shoppers in a unified network, simplifying the online buying process for both. With over ten million registered shopper accounts, the company appears to be at an inflection point for future growth. The most recent portfolio investment involves an indirect investment into SpaceX, which provides shareholders with exposure to the world’s largest private aerospace manufacturer, space transportation services, and satellite communications company – and clear leader in the emerging “space economy.” Stack Capital is very bullish on the prospects for its satellite communications business over the coming years and believes that the decision to build a satellite constellation will result in a large amount of free cash flow for shareholders.
Overall, Stack Capital has been pleasantly surprised by the level of deal flow over the first several months of its existence and, specifically, the primary transactions that it has been given access into. Primary transactions are the preferred investment vehicle for Stack Capital as they allow for access into company financials and data rooms. ‘Buying right’ is a key component of the overall investment approach utilized at Stack Capital and is critical to understanding how a potential investee company is valued relative to both its private and public company peers. The ability for Stack Capital to apply its fundamental analysis and due diligence process to each investee company is expected to result in better investment outcomes for its shareholders, over the long term.
Moving forward, Stack Capital will continue to seek out and invest in highly sought after, growth and late-stage pre-IPO businesses; serving as a one-stop solution for all investors seeking to gain exposure to this attractive asset class. You can learn more about Stack Capital and its portfolio by visiting its website here.