Robert Smith, Bank of America anchor emerging Trident

The firm aims to excite positive social change in American small businesses, says Brightwood Capital, and Goldman Sachs Special Sits alumni, founder Eric Taylor.

Trident, a New-York based small-cap investor with a focus on improving racial equity, has received some eye-popping anchor investors for its first formal fund.

Trident has secured an investment from Vista Equity Partners founder and chief executive Robert Smith, according to a press release Private Equity International has seen exclusively.

Other anchor investors include Bank of America; Moody’s; Sengal Selassie, co-founder and co-chief executive of New York-headquartered mezzanine shop Brightwood Capital Advisors; Richelieu Dennis, CEO and executive chairman of New York venture firm Essence Ventures; and Freada Kapor Klein, founding partner of Kapor Capital, the VC investment arm of the Kapor Center for Social Impact based in Oakland, California.

“We are thrilled to have the support of such a strong slate of investors for Trident,” Eric Taylor, founder, CEO and CIO, said in the release. He previously worked at Brightwood and Goldman Sachs in the special situations group.

The vehicle, Trident American Dreams Fund I, will target $250 million, according to a recent US Securities and Exchange commission filing, and is well on its way, PEI understands. Trident has been active as a direct investor since 2017.

Many of the investors were also appointed to a non-fiduciary Trident American Dreams Advisory Board that will advise the fund, though Smith is not among them.

Simply put, the firm’s mission is to “do well by doing good”, said Taylor in an exclusive interview with PEI. “Red-blooded American small businesses”, which are underserved by private equity, are the firm’s bread and butter, he added.

Trident hopes its focus on diversity, equity and inclusion will help it achieve alpha. About 60 percent of the firm’s employees are people of colour, as are 60 percent of the people who run its portfolio companies. “It’s not about doing diversity for diversity’s sake, but widening the aperture to drive value for limited partners as well as underserved communities,” said Taylor.

The other half of the equation is technology. Trident utilises a proprietary algorithm with 10 quantitative or qualitative heuristics to source and help diligence portfolio companies in an effort to remove inherent bias from screening. It also removes the operational burden from investment staff, Taylor said.

“An average private equity firm looks at 50 investments to make one,” he explained. “The question isn’t how to use tech to do deals, it’s how to eliminate the 49 you don’t want to do.”

Trident targets industrial, healthcare and consumer companies with between $10 million and $100-plus million in revenue with EBITDA between $2 million and $20 million while “sparking positive social and economic change in minority communities”, according to the press release.

The firm has returned 23 percent net to investors since inception in 2017, Taylor said.

Trident’s legacy portfolio is comprised of active investments in four companies, including a fast-casual regional restaurant chain specialising in vegan soul food and a rollup of optometry practices in Arizona. The firm successfully completed its first divestiture in a fifth company, Wild Things, a cold-weather apparel company, in 2020.

The firm’s namesake comes from three places: the flag of Barbados, from whence Taylor’s mother emigrated to the US; Taylor’s all-American high-school swimming career; and a winking reference to a pivotal conflict in Game of Thrones, Trident’s team has many fans of the show, according to Taylor.

Trident has pledged at least 13 percent, roughly the percentage of Black Americans, of all value created by the fund will accrue to the Black American community. It plans to provide that value through increased employment opportunities, access to capital, health and education benefits, wealth creation opportunities and representation throughout the value chain.

Smith’s isn’t the only high-profile name attached to the firm. Last week, Trident appointed Aron Betru as chief strategic officer and chief operating officer. Previously, Betru was the managing director for the Milken Institute Center for Financial Markets, leading its Access to Capital, Capital for Innovation and strategic innovative financing initiatives.

This piece was updated to reflect the fund is targeting $250 million.