Thinking About Thinking

I am pleased to share in today’s announcement that Volition Capital has led its first investment with a $15 million financing in G5 Search Marketing. 

The investment thesis for G5 is pretty simple.  100% of mid-size businesses would love to have an online presence that consistently generates high quality, low cost leads – and 99% of mid-size businesses don’t know how to do it.  To achieve the goal you need to be expert in website design, search engine optimization, search engine marketing, and multi-channel lead management.  And, perhaps most importantly, you need to understand how all of these areas interrelate specifically in your industry.  G5 fills that gap in certain large verticals where they have domain expertise – like self-storage, multi-family housing, and senior living.  The thousands of mid-size businesses that have become G5 customers have their website and marketing efforts outsourced to and managed by G5, and they see the impact immediately in terms of low cost, high quality leads. 

The wide disparity in results between using G5 and doing it yourself has led to a highly recurring, bootstrapped business which is right down the sweet spot of Volition Capital’s investment focus:

• High growth & solid revenue base: 20 consecutive quarters of record revenue. 
• Capital efficient & founder-owned: They have never taken any outside capital or debt. 
• Under-served geographic area: Beautiful (and hard-to-get-to) Bend, OR
• Volition Capital investment: First and last institutional capital, active Board involvement

One attribute of G5 which is key to all of our investments is we want to see the team have an “aspiration for greatness”.  Every Volition portfolio company needs to have both a proven business and breakout potential.  The latter starts with the management team thinking big – which is certainly the case here.  The number of mid-size businesses that could benefit from using the G5 platform is not just thousands, or tens of thousands – but potentially hundreds of thousands if not eventually millions.  The first-generation “local search” vendors adjacent to this space have a narrow/weak offering and poor value proposition – which is readily obvious given their high customer churn rates and lack of profitability.  G5’s intensely loyal customer base and strong financial performance demonstrates that they are doing things both differently and better.  We believe G5 represents the next-generation in local marketing solutions and couldn’t be more proud to partner with them.