Chicago-based private equity firm Pfingsten Partners sought to make their first-ever investment in drones, a rapidly changing technology with constantly evolving regulations and uses.
Pfingsten wanted to focus on drone racing. But, they didn’t yet have a firm grasp on this niche part of the drone market; and so, they turned to Apex Leaders for an industry evaluation. Over the course of eight months, Apex Leaders connected the deal team to drone-racing experts and industry insiders.
The Search: Validating Sector Appeal
Drone racing industry professionals are notoriously hard to reach and at times reluctant to speak about the still uncertain future of the industry. Apex Leaders was targeted and persistent with outreach and eventually reached sought-after candidates, including:
- Former COO at RotorSports / Drone Sports Association
- Managing Director & Co-founder at Freedom Drone Sports
After speaking with advisors involved in drone racing our client discovered a growth opportunity: parts and drones used in racing have a high resale value, and these can be resold online.
“Apex Leaders has become our go-to partner in finding out the specifics of unknown industries. The firm is a great resource that has a strong team of researchers to help solve questions that arise from looking at new deals.”
~ Jeff Chaney, Pfingsten Partners
Changing Angles and Honing in on a Target
At this point, Pfingsten decided to more aggressively pursue the purchase of a company called Lumenier. This company sells and manufactures high-end racing drones in an online store.
But what about Lumenier’s reputation?
Apex switched gears. We sought to help our client evaluate whether Lumenier provided the kind of drones racers are looking for and whether they consistently delivered these products.
Lumenier sells drones on it’s website, but it also sells to hobby stores online. Apex’s research team targeted this obscure part of the market, vetting buyers at large and small hobby stores. Most notably, Pfingsten engaged:
- Director of Purchasing and Supply Chain Operations | Horizon Hobby
- Former VP of Marketing and Advertising | Hobbico
Because hobby stores sell an array of products, it was difficult to find drone buyers. Apex Leaders thoroughly vetted each buyer over the phone and presented only the ones who could provide valuable insights on consumer buying preferences.
Ultimately, Pfingsten decided to invest in Lumenier. There is enough growth potential in drone racing; and after speaking with our advisors, it validated the firm’s investment thesis early and guided Pfingsten to an attractive target in the drone market. Moreover, Apex Leaders helped our client confirm that the prospective company provided reputable products and customer service.