He Turned Down a Bigger Offer From Another Investor. The Result Was 6-Times Revenue Growth
Abuv Media founder Doug Jones attributes much of his company’s success to its hands-on–but not too hands-on–relationship with Rockbridge Growth Equity.
By Graham Winfrey, Features Editor, Inc.
Doug Jones was just two years into his first startup when he got a cold call from Kevin Prokop, co-founder and managing partner of Detroit-based private equity firm Rockbridge Growth Equity. Jones’s content marketing company, Abuv Media, helped online universities identify prospective students, and its more than 50 percent year-over-year growth since it was launched in 2012 had caught Prokop’s attention.
Rockbridge had begun as the private equity investment arm of Quicken Loans founder Dan Gilbert’s family office. Eventually, it grew to raise investment capital from institutional investors. Though Gilbert was well-known for owning the NBA’s Cleveland Cavaliers–and his at-times contentious relationship with LeBron James–the Rockbridge investment team kept a lower profile.
Or as Jones puts it: “I had no idea who they were.”
That changed after members of the Rockbridge team flew to San Francisco, where Abuv Media was based, to meet with Jones and his co-founder, Dan Schuessler. In 2014, Rockbridge acquired a majority stake in the company alongside the PE firm Falcon Investment Advisors. Though Jones and Schuessler had received a slightly larger offer from another investment firm, they had developed a stronger relationship with the Rockbridge team. “We said, ‘Let’s go with whom we trust the most and what our gut says is the right thing for us strategically for the next few years,’ ” Jones says.
It helped that Rockbridge offers its portfolio company founders access to a network of more than 100 businesses from the Quicken Loans family of companies. “Having so many partner companies that were able to drop some knowledge and best practices in the world of digital media was really valuable,” Jones says, noting how he and Schuessler learned from Rockbridge to focus on just a handful of the key performance indicators they had been looking at. “As an entrepreneur, you like to say yes to a lot of things. They helped us say no.”
Rockbridge also helped land top talent, helping Abuv recruit marketing and content executive Lydia Poon and data scientist Doug Milnes. Poon would go on to lead the company’s largest team, while Milnes managed all the client relationships and helped turn Abuv Media from an affiliate business into a marketplace for students.
“When you go direct in that business, it just drives up the valuation of your company,” Jones says.
Despite owning a majority stake in the business, Rockbridge and Falcon never seized control of Abuv’s strategy. While some private equity firms have a reputation for trampling the line between helpful and meddlesome, Rockbridge says it focuses on backing healthy, growing companies and keeping founders in leadership positions.
“There is a balance in terms of finding ways to be supportive while understanding that the reason the business has been successful is because you’ve got talented entrepreneurs like Doug and Dan with their hands on the wheel,” says Prokop. “Our job as a PE firm is to bring additional perspectives and additional expertise to bear, but to let them do what’s made them so successful.”
It’s worked. In 2016, Abuv Media claimed the No. 178 spot on the Inc. 5000 after having grown revenue by 2,071 percent over a three-year period. Two years later, after increasing annual revenue sixfold under Rockbridge’s ownership, Jones and Schuessler sold the company to HigherEducation.com for an undisclosed sum. The pair stayed on for a year before spinning off a personal finance education site that they’d started at Abuv Media called MoneyGeek.
Rockbridge has a stake in MoneyGeek, and some of the firm’s partners have personal investments in the company. Annual revenue is up 30 times year-over-year, according to Jones, who says the upside for MoneyGeek is even greater than for Abuv Media. “We’re off and running on this one,” he says.