Successful value creation in portfolio companies

The name Sophora Unter­neh­mer­ka­pi­tal reflects our philo­so­phy and our invest­ment approach. The pearl string tree (Sophora Japo­nica), also known as the honey tree, is a valuable nutri­ent plant for bees — a symbol of our role as a value-crea­ting and relia­ble part­ner for entre­pre­neurs. While in the past there was often talk of “locusts” in the private equity envi­ron­ment, who break up compa­nies in order to maxi­mize short-term returns, we pursue a long-term, part­ner­ship-based approach. To be the honey­bee among inves­tors — a part­ner that crea­tes sustainable value and helps compa­nies grow. Our focus is on small and medium-sized compa­nies that are looking for an expe­ri­en­ced and entre­pre­neu­rial inves­tor to realize their full potential. 

A decisive success factor for our rapid fund­rai­sing was our unique inves­tor base. The majo­rity of our inves­tors are entre­pre­neurs them­sel­ves, supple­men­ted by family offices and expe­ri­en­ced perso­na­li­ties from the corpo­rate finance commu­nity. This broad and high-cali­ber base not only ensu­res our inde­pen­dence, but is also an essen­tial source of deal leads. A signi­fi­cant propor­tion of our invest­ment oppor­tu­ni­ties come from direct recom­men­da­ti­ons and access from our inves­tor base — an advan­tage that gives us targe­ted access to attrac­tive compa­nies that often remain under the radar of tradi­tio­nal PE funds. In addi­tion, we gain valuable market and indus­try insights that help us to iden­tify trends at an early stage. We are parti­cu­larly proud of the fact that around 20 % of our inves­tors are female — an above-average figure in our sector, which under­lines our commit­ment to promo­ting female entrepreneurship. 

We mana­ged our first fund­rai­sing on our own, without the support of a place­ment agent or insti­tu­tio­nal inves­tors. The first finan­cing round was chal­len­ging, but with the first two successful tran­sac­tions in 2023 — auxa­lia and smaX­tec animal care — the fund­rai­sing gained considera­ble momen­tum. Our inter­di­sci­pli­nary approach, which combi­nes invest­ment exper­tise with the opera­tio­nal expe­ri­ence of our value crea­tion part­ners and co-foun­ders, proved to be a key success factor. — At its core, we combine capi­tal from entre­pre­neurs for entre­pre­neurs — and this is exactly what enab­led us to build a strong and sustainable fund in a short space of time. 

At Sophora, value crea­tion is an inte­gral part of our invest­ment process from the very begin­ning. Right from the initial scree­ning phase, we analyze a company’s busi­ness plan and growth poten­tial to ensure that we can create real added value. A key compo­nent of this is the trus­ting coope­ra­tion with the manage­ment teams. 

From the very first meeting, we make it clear how our approach helps compa­nies move forward in a targe­ted manner. Our Value Crea­tion part­ners have many years of expe­ri­ence in leading posi­ti­ons and in buil­ding successful compa­nies. With their deep under­stan­ding of scaling and sustainable growth, they create real added value and provide targe­ted stra­te­gic impe­tus for the next stage of development. 

We always make our invest­ment decis­i­ons toge­ther as an inter­di­sci­pli­nary team. Our Invest­ment Commit­tee is made up of six part­ners, inclu­ding our two Value Crea­tion Part­ners. At least four votes in favor are requi­red for final appr­oval of a tran­sac­tion, with a maxi­mum of one vote against. This ensu­res that diffe­rent perspec­ti­ves are taken into account and that our decis­i­ons are made on a broad, well-foun­ded basis — beyond the pure view of the invest­ment team. 

A key advan­tage of our approach is the close and early invol­vement of entre­pre­neurs, which crea­tes trust and streng­thens us in compe­ti­tive proces­ses. Many of our part­ner compa­nies are initi­ally faced with opera­tio­nal chal­lenges and are looking for a way to achieve grea­ter stra­te­gic clarity. We help them to master this tran­si­tion and lay the foun­da­ti­ons for sustainable growth. 

Our current Fund I is the proof of concept that our refi­ned approach is working successfully. Our aim is to build up a focu­sed port­fo­lio of 4 to 5 invest­ments and thus confirm our stra­tegy in practice. 

The fund curr­ently compri­ses four invest­ments with a clear focus on tech­no­logy and sustaina­bi­lity. The auxa­lia WESTCAM Group, a leading provi­der of soft­ware and digi­ta­liza­tion solu­ti­ons for the cons­truc­tion and manu­fac­tu­ring indus­tries, has deve­lo­ped into a mid-cap through a targe­ted buy-and-build stra­tegy. At smaX­tec animal care, a leading SaaS provi­der in the field of animal health, we recently reali­zed a successful partial exit to KKR and High­land Europe, but remain on board as a mino­rity inves­tor as we are convin­ced of further growth. FLOW-TRONIC, a specia­list provi­der of flow meters for the water and waste­wa­ter indus­try, has also been part of our port­fo­lio since 2024. A new addi­tion is a cyber­se­cu­rity specia­list in the DACH region, whose name will be published in the coming weeks — here, too, we are pursuing a clear buy-and-build strategy. 

Our port­fo­lio is deve­lo­ping extre­mely well and our value crea­tion approach is alre­ady show­ing clear results. We have promi­sed our inves­tors that we will only invest in compa­nies where we can achieve at least three times the inves­ted capi­tal in the Sophora base case — and I am convin­ced that we will exceed this target. — Our pipe­line is well filled with both new invest­ments and add-on oppor­tu­ni­ties. At the same time, our first fund will soon be fully inves­ted and we are alre­ady prepa­ring “Sophora Capi­tal Entre­pre­neur Fund II” to seam­lessly conti­nue our growth — with the same clear stra­tegy and proven approach to crea­ting sustainable value. 

Jenni­fer Regehr

Jenni­fer Regehr has been active in the private equity indus­try for more than a decade and began her career in 2011. Prior to foun­ding Sophora, she worked as a Prin­ci­pal at Silver­fleet Capi­tal, a pan-Euro­pean private equity fund, where she contri­bu­ted her exper­tise from 2014 to 2022. Jenni­fer star­ted her career in Corpo­rate & Invest­ment Banking at UniCre­dit Bank, where she specia­li­zed in struc­tu­red acqui­si­tion finance and high-yield capi­tal markets tran­sac­tions in the DACH region. 

jennifer.regehr@sophora.de