Perspective: Insights on the Private Equity Market

December 2020 - Diversity in Investing Case Study

Investing in Overlooked Places

At Trident, we have two fundamental beliefs that underpin most of our investments. First, we believe that investing in areas that are overlooked by the majority of institutional investors creates potential for industry-leading returns (hence our small business obsession). Why? There is less competition, which allows us to find, buy and grow the best companies at reasonable prices.

Second, we believe that great operating teams build great businesses. A team cannot be great without diversity of background, character, and thought. Why? It has been proven that teams solve problems faster when they are cognitively diverse.1

At Trident, diversity is not a buzzword. It is reflected in our employee base and in our ownership. We are proud of the fact that 63% of our workforce is either brown, black or female, and we are proud that the majority ownership of Trident is diverse. This diversity is therefore reflected in our decision-making. The result? We are proud of the fact that 60% of our portfolio happens to be helmed by an operator of color or female.

We take controlling equity positions in small businesses that are women and minority owned / operated because it speaks to the Investment culture Trident fundamentally embodies. We are obsessed with value creation by operators who have superior vision and experience. We love trafficking in areas of the economy that other investors shy away from. We relish the opportunity to positively and sustainably impact the American economy not just because it is the right thing to do, but because investing in diversified companies and management teams is how to build a successful and diversified portfolio. Put another way, it is just good business.

Where is the Opportunity?

Small businesses that are minority and women owned are particularly overlooked by institutional investors. They are less likely to receive financing from private investors, banks, and government funding sources. A 2019 report by the Federal Reserve Bank of Atlanta showed that “38% of Black-owned small businesses did not receive any of the financing they applied for, compared with 33% of Latino-owned businesses, 24% of Asian-owned businesses and 20% of white-owned businesses.”2. This extends to bank loans where according to the US Federal Reserve, more than half of companies that have black owners were turned down for loans, a rate twice as high as white business owners.3

Not only are minority and women owned businesses ignored by traditional capital sources, but we also see that when they do receive investment, they are often undercapitalized. They receive small, nominal amounts that are perfunctory by their very nature. This makes growth prohibitive and competition stiff. According to a 2019 report by the Congressional Black Caucus, 28.4% of Black entrepreneurs found that their profits were negatively impacted by their access to capital4, and according to the Small Business Administration: “Blacks and Hispanics were more likely to be undercapitalized when launching their businesses. They were about twice as likely to start their businesses with less than $10,000 in financial capital.”5

We see time and time again minority and women-operated businesses being undercapitalized and failing to reach the critical tipping point for real growth. In many ways they are set up for failure. Without capital, businesses cannot invest in PP&E, maintenance, hiring, training, marketing and other key aspects of organic growth, or acquisitions for inorganic growth. It takes money to make money — and Trident’s fundamental ethos calls for finding these overlooked opportunities and buying them to create value for our Limited Partners.

Why is it Important?

As investors we see this as an opportunity to make select buyout investments that have a positive impact on minority and women operators, their businesses and the communities they are located in. In so doing, we create outsized returns for our Limited Partners by investing in an overlooked economy. Since Trident’s founding we have made these investments and seen our thesis play out. What follows is a case study on one of our investments which shows what this looks like in action.

Case Study: Cornbread

Company and Founder Background

Cornbread is an innovative and unique fast casual restaurant concept using farm-to-table ingredients sourced from over 120 small-production, family-owned businesses throughout the New Jersey and Pennsylvania region. Trident’s partnership with Cornbread exemplifies our commitment to supporting minority entrepreneurs and impacting underserved communities.

Cornbread was founded by Adenah Bayoh, who came to the US as a refugee at age 13, escaping civil war in her home country of Liberia. She opened her first IHOP store at the age of 27 in Irvington and managed to grow her business to the point where she is currently the second largest employer in the Irvington township. Adenah is consistently one of the top IHOP franchise operators, and in 2018 won the “Heart of IHOP Award”, given to the franchisee who has demonstrated the greatest amount of love, compassion and care for members of their local communities and embodied the brand’s promise.

In recognition of her accomplishments, Adenah was appointed in January 2015 to the prestigious Federal Reserve Bank of New York Advisory Council on Small Business and Agriculture. Further recognition includes being included in Ebony Magazine’s Power 100 list, and being honored as one of the Top 50 Women in Business in New Jersey.

Impact on the Community

The company continues to make a meaningful impact on the underserved communities in which its stores are located. Adenah’s commitment to providing not just good and healthy food but also steady paying jobs to those in her community are some of the reasons there is strong local loyalty to the brand. Three key ways in which the company impacts its community are:

  • Lowering recidivism through employment;
  • Commitment to healthful food and sustainability in farming; and
  • Feeding the underserved in its community.


Lowering Recidivism

Cornbread partners with local halfway houses to offer second chances to people who have been incarcerated. The objective is to utilize the untapped talent of this overlooked employee pool and provide them with opportunities to re-enter the workforce. Re-entering the workforce is one of the greatest challenges that the previously incarcerated face. Cornbread is often the first place to give people that first second chance. In 2019 over 50% of employees were formerly incarcerated or living at a halfway house. Increasing employment among this population decreases the chances of recidivism and improves overall outcomes in communities with higher rates of previously incarcerated persons.

Healthful Food and Sustainability

Cornbread provides communities with access to healthful, organic, hormone-free, and steroid-free soul food. Soul food cuisine is typically characterized by fried and carb-heavy foods with high calorie counts that contribute to obesity, one of the leading factors in rising rates of heart disease and diabetes in Americans. Incidences of heart disease and diabetes are disproportionately high among minorities and poorer Americans.

Cornbread’s soul food, by contrast, is made with quality, organic ingredients that are 100% locally and sustainably sourced from over 120 small-production, family-owned businesses throughout the New-Jersey and Pennsylvania region. By offering a healthier, organic, locally-sourced and great-tasting option for soul food items (that people would otherwise continue to buy elsewhere), Cornbread is helping to create a healthier environment for these communities. By avoiding factory farms and focusing on sourcing from local growers, Cornbread ensures higher quality food while also supporting a supply chain of locally-owned businesses and farms.

Feeding the Underserved

Cornbread has consistently made efforts to provide food to those in need throughout its community through seasonal events such as Free Turkey Giveaways at Thanksgiving, among others. This Thanksgiving they gave away close to 300 meals to the homeless. During COVID-19, the Company has increased its efforts to provide food at low or no cost, despite the reduction in its paying traffic due to the pandemic. The Company has partnered with local organizations to feed senior citizens, children, and other vulnerable groups at risk of going hungry, including over 500 meals for essential workers. Cornbread provided meals to feed essential workers at Beth Israel Hospital through SOMA (South Orange Maplewood Association) and FLAG (Front Line Appreciation Group), provided meals for the staff, doctors, and nurses at UMDNJ (University Hospital in Newark), and fed seniors stuck in their homes throughout the township of Irvington.

Response to COVID-19

The Company has doubled down on its steadfast commitment to civic engagement throughout the COVID-19 pandemic, which has been particularly devastating to restaurant workers and lower income communities. Cornbread has continued to pay its employees, whether they are working or not, and has extended sick pay leave should employees fall ill. Adenah has also engaged in advocacy work with the Federal Reserve Bank of NY around funding for minority-owned small businesses throughout the pandemic. Cornbread management is on the reopening task force for the City of Newark organized by Mayor Baraka, and have pulled together volunteers to help small businesses (most of which are women & minority-owned) across the country apply for the relief programs.

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End Notes

1 Teams Solve Problems Faster When They’re More Cognitively Diverse, Harvard Business Review, March 2017.

2 Federal Reserve Bank of Atlanta, Small Business Credit Survey, Report on Minority-Owned Firms, December 2019.

3 U.S. Federal Reserve, Report to the Congress on the Availability of Credit to Small Businesses, September 2017.

4 Congressional Black Caucus, The State of Black Entrepreneurship in America, April 2019.

5 U.S. Small Business Administration, Financing Patterns and Credit Market Experiences, February 2018.

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