IMPACTASSETS 50™
An Annual Showcase of Impact Investment Fund Managers
ImpactAssets 50
An Annual Showcase of Impact Investment Fund Managers
HCAP Partners
Nutrition, Health and Wellness
Diversity, Equity and InclusionFirm Overview
HCAP Partners is a provider of mezzanine debt and private equity for underserved, lower middle market companies throughout California and the Western United States. As a nationally recognized impact investor, the firm actively works to set industry standards as a mission-driven fund manager. HCAP Partners provides creative debt and equity structures to serve the needs of the lower middle market, which are attractive to closely held companies and private equity firms seeking a collaborative, noncontrol, institutional investor. Through active engagement with its portfolio, the team at HCAP Partners provides value-added resources such as operational and financial guidance, capital raising, and strategic exit planning. Through its Gainful Jobs Approach™, the firm works to enhance job quality in ways that facilitate a positive impact on underserved businesses, their employees, and their communities.
Years of Operation: 10 years or more
% of Capital from Top 3 Investors: Less than 25%
HCAP invests capital and improves job quality in lower middle market companies primarily located in the Western United States which are underserved by traditional capital sources, including those companies located in low and moderate income areas (LMI) and companies employing individuals residing in LMI areas or earning LMI wages.
HCAP Partners' investment strategy focuses on building a diversified portfolio across healthcare, business services, and IT services/software, and manufacturing, taking into consideration company size, historical and projected performance, and transaction structure. HCAP aims to invest the majority of its capital in companies underserved by traditional capital sources, including companies located in low- and moderate-income areas (LMI) and hiring LMI employees. HCAP works collaboratively with companies to improve job quality, particularly for women, people of color, and LMI workers to foster operational excellence and achieve business success. HCAP seeks to invest in businesses with $10M-$100M in revenue, $1M+ in EBITDA, and $3M-$25M in capital requirements. Investments will typically be structured in the form of loans and, under certain circumstances, HCAP will consider making opportunistic structured equity investments of approximately 30% of deployed capital. Funds will generally be used for growth-oriented working capital, recapitalizations, acquisition of another company, or capital investment.
HCAP’s primary differentiator is its longstanding commitment to creating quality jobs through its Gainful Jobs Approach™. Among the GIIN’s IRIS+ Directory, only 10 of 1,455 impact funds note quality jobs as an impact theme. HCAP’s Gainful Jobs Approach includes six key attributes of a quality job: broad-based participation, opportunities for advancement, sustainable livelihood, DEI: belonging, paid time off, and wellness initiatives. During due diligence HCAP assesses workplace practices and engages company management to create a roadmap for job quality improvements which is implemented and tracked during the investment. HCAP is also committed to field building and robust impact measurement. HCAP was one of the first firms to implement an online impact data platform to provide insights to portfolio companies to inform their work on job quality. HCAP participates in field building, including as a founding member of Impact Capital Managers where Hope Mago serves as board chair.
Investment Example
BetterNight is a healthcare technology company that streamlines the diagnosis, treatment, and care management of sleep disorders, including sleep apnea. BetterNight leverages telemedicine, home sleep tests, and sleep therapy to increase accessibility, affordability, and adherence of sleep apnea care. HCAP’s value creation activities and Gainful Jobs Approach have supported: -Hiring and recruiting: identifying recruiters and hiring firms and reviewing Chief Revenue Officer candidates -Enhanced governance and reporting: helping standardize financials and KPIs and evaluate potential board members -Capital raising: advising on capital raising and acquisition strategy and providing follow-on funding to support growth -Employee insights: utilizing employee engagement surveys and job quality data to gain insights into employee experiences and opportunities to enhance job quality -Job quality improvements: expanding health benefits, accelerating 401(k) match vesting, enhancing employer-paid life insurance, introducing anonymous employee reporting, holding leadership lunches, and celebrating staff through an annual core values award luncheon
Leadership and Team
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Tim Bubnack – Managing Partner More Info
Tim Bubnack joined HCAP Partners in June 2007 and has more than 25 years of lending, technology investment, and financial experience. Tim is currently representing HCAP Partners as a Board Director for RPI, Cubex Systems, and AMFM Healthcare and is a Board Observer for Lone Star Analysis and TCS Healthcare. Prior to joining HCAP, Tim spent five years with Silicon Valley Bank as Managing Director of commercial banking activities in the San Diego region where he managed early stage and middle market banking relationships in the technology, communications and biomedical industries. |
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Frank Mora – Senior Partner More Info
Frank joined HCAP Partners in February 2013, and is responsible for originating, structuring, closing and monitoring portfolio investments. He is currently a board observer or actively involved in PriMetrica, Burke Williams, eLearning Brothers, and Veyo. Prior to joining HCAP Partners, Frank was with DBI Capital, a Southern California based lower middle market private equity buyout group. Frank joined DBI in 2006 where he was responsible for sourcing and structuring investment transactions, including co-investments into two HCAP Partners portfolio companies. |
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Hope Mago – Partner More Info
Hope joined HCAP Partners in May 2009. Hope participates in the origination and analysis of new investment opportunities, investment due diligence, deal underwriting, and investment monitoring. In addition, he has led the development of impact investing initiatives since joining the firm and contributes to thought leadership in the impact investing space. Hope is currently a board observer or actively involved in Arosa, CortiCare, TCS Healthcare Technologies, and Sleep Data. Prior to joining HCAP Partners, Hope worked as an Analyst at the Reserve Bank of Zimbabwe where he was involved in economic policy formulation, lending due diligence for export ventures receiving funding through the Export Support Facility under the Exchange Control Division. |
Financial Performance
Impact Performance
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Percentage of Total Assets Under
Management that are Impact Investments: |
100%
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We conduct a Gainful Jobs Approach baseline assessment and employee engagement survey during due diligence to assess workplace practices, workers' perspectives on the company, and opportunities to improve job quality. Using the job quality baseline assessment we co-develop a series of job quality goals with company management that are a condition of investment close. We also examine sustainability and ESG factors during due diligence that are financially material to the company and its industry. Together these assessments guide our value creation efforts and engagement with portfolio companies over the investment period.
Impact Tracking and Monitoring
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4250 Executive Square, Suite 500, La Jolla, CA 92037 USA
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