Established in 2003, McGowan Capital Group is a local firm dedicated to making an impact on growing companies in eastern South Dakota. They achieve this through careful risk analysis and a commitment to their clients for the long haul.
Founder and CEO, Gene McGowan, brings a broad range of expertise to the table, including 20 years in the U.S. Navy, a 20-year career in public securities, and a brief time spent with Bluestem Capital before forming his own private investment group.
In the early days, McGowan Capital invested in a broad range of debt and equity. Following the credit crisis of 08-09, the focus shifted to the commercial mortgage market. As time went on and the group continued to increase its holdings, they became a licensed non-residential mortgage lender. McGowan Capital often operates as the lender next in line after a company has exhausted its bank options.
“If they already have a banking relationship, they’ve established themselves as having some viability and credibility,” McGowan said. “It’s not that we’re going to accept that fact by itself, but it’s a good place to start.”
What sets McGowan apart from other investors?
While many private equity firms and investment companies raise funds in blind pools, and race through deals, buying and selling companies to make shorter term profits for their investors, McGowan Capital takes a different approach.
“Our model is that when we invest in a company, we’re more inclined to stay with it, develop it, and work with it,” McGowan said. “We add funds as needed and see what we can produce out of it, so it’s more like an operating company in the way that it functions. We don’t have a timeline.”
It takes freedom to operate in a slow, steady manner, and McGowan Capital has structured itself that way intentionally.
“We don’t have very many investors. It’s primarily our own funds and balance sheets and a few partners,” he explained. “If there’s an opportunity that requires outside investors, we will open it up, but it will be for specific investments as opposed to a pool or a blind pool. They’ll know exactly where their money is going.”
By sticking with a company long-term and assisting them not only financially, but in management as well, McGowan Capital is able to make a powerful impact on young businesses and the communities they serve. In fact, with three of their current portfolio companies, McGowan estimates they have created nearly 500 jobs in the Sioux Falls market.
A gradual approach does not come without a careful assessment of risk, but the most important element is the talent of the entrepreneur.
“It’s all about who that entrepreneur is, what their experience is, and what their capabilities are, because we can’t make up for what the CEO doesn’t have,” he said. “We can work with them and create something more together, but we can’t replace their talent or brainpower.”
McGowan emphasizes that his team works side-by-side with companies to help them achieve success, rather than running everything for them. They hold a lot of what they call “Prayer Meetings,” and McGowan is interested in making an impact that will be beneficial for everyone—the company, the investors, and the employees.
Working with McGowan Capital
For the most part, McGowan Capital takes interest in companies that are developing traditional products rather than software or new concepts. Additionally, they keep their focus on companies in eastern South Dakota.
“We know and understand the people that live and work here better than we would in South Carolina,” he said. “It’s going to be a lot easier to stay in close contact, and that adds security and value to the company.”
When it comes to building a business, McGowan says the value of a location like Sioux Falls is almost unmatched.
“It’s as good as it gets,” he said. “Our city fathers laid some groundwork for the way things work in Sioux Falls that make business people here among the luckiest in the world.”
If you’re interested in speaking with McGowan Capital, their team is happy to set up a meeting or a phone call.
“We have open doors, and we meet with a lot of people,” McGowan said. “Our advice, for what it’s worth, is free, and we always look forward to talking to people.”
For more information, visit www.mcgowancapitalgroup.com.