Charlotte-based investment firm Paradise Equity Partners wants to be the face of equal opportunity investments in the world of sports and entertainment.
NFL player-turned-financial advisor Robert Mackey, 42, created the idea for the company last summer amid the social justice movement and the ongoing coronavirus pandemic. He holds a majority ownership stake in the firm, which he formally launched earlier this month, adding to a growing list of minority-led asset-management firms across the country.
Still, more Black people need to be exposed to the industry, says Mackey.
“When you look across the private equity landscape, you’ll be hard-pressed to find more than a few African Americans in any of the firms in the United States,” he said.
Why it matters: In the U.S., the asset-management industry is run mostly by White men. A Knight Foundation analysis identified 106 minority-owned firms among active private equity funds, a number that has climbed from about 3.5% in 2006 to 5.4% in 2017.
Although the number of firms has increased, minority-owned PE firms control less than 4% — $121 billion — of total assets under management in the private equity industry, according to the analysis.
Additionally, only 2% of investment professionals are Black, reported The Plug, a Black tech news and insights platform.
To get into private equity requires money and relationships, and Mackey turned to a Charlotte titan for both. Hugh McColl Jr., former Bank of America CEO and McColl Partners founder, is a primary investor in Paradise Equity Partners. Mackey met the retired banker at a meeting nearly five years ago and established a mentor-mentee relationship.
“This is not an easy industry, but Robert has what it takes to be successful,” McColl said in a statement. “He is both knowledgeable and confident, and that is key in this profession.”
The firm currently is in talks with investors to raise a $100 million culture fund to invest in several companies by 2022. According to the firm’s website, the investment strategy includes sports and entertainment companies involved with licensing, publishing, production, broadcasting rights and technology.
Mackey, a Fort Mill native, played linebacker at Winston-Salem State University and later played the same position in the NFL for the Houston Texans during the 2002 season.
He also served as associate director of sports and entertainment in Morgan Stanley’s Global Sports & Entertainment division and joined the NFL Player Engagement’s Leadership and Advocacy group to help provide opportunities in underserved communities.
The company’s name is a nod to his childhood neighborhood, Paradise, a historic Black community outside of downtown Fort Mill.
Read more about Mackey and Paradise Equity Partners in our Q&A below.
Answers have been edited for length and clarity.
Q. For several years, you’ve worked with companies like Merrill Lynch and Morgan Stanley. Is that something you’ve always had an interest in?
It was never something I wanted to do before I got introduced to it. I just thought those companies were stock brokers. I didn’t understand what a financial advisor was. I never had a financial advisor, and nobody in my family had one. We knew community banks. We knew Founders Federal Credit Union.
I didn’t have the knowledge of what it was until I was building my foundation and building great relationships with Fortune 500 executives.
I was living in Chicago at the time, and I had a friend that worked at Merrill Lynch. I knew I was moving back home in 2016 to start a family, so I gave him a call and he explained the role to me. It was basically what I was doing with my foundation.
It was by happenstance that I got introduced to financial advising, but it was one of the best decisions I have made in my professional life for sure.
Q. Black professionals represent a small percentage of private equity firm owners. Why do you think that is?
It comes down to your network of people that you cultivate relationships with over the years. When you’re in the private equity space, you’ve got to have access to capital. You need to know people with money.
The neighborhood I grew up in, you weren’t interacting with generational wealth on a daily basis. It’s hard to navigate that space if you don’t have those relationships around you.
Q. You’ve mentioned Hugh McColl as one of your mentors. How did you two meet?
I met him shortly after moving back to Charlotte at a breakfast for business leaders. It was six Black leaders and six White leaders trying to bridge the racial gap in the city of Charlotte and around the country by utilizing our platforms.
Hugh and I ended up sitting beside each other at the breakfast, and I made a comment that he liked. He gave me his number and told me we need to catch up for lunch one day. We finally connected and we had lunch. Then we had dinner, and I asked him to be my mentor. He said he didn’t know what he could teach me because it seemed like I knew everything. [laughs]
I told him, “One thing I can’t beat is experience, and I think it’d be great to have somebody like you in my corner to help me navigate the corporate space and life, in general.” He’s been great.
Q. How did you get him on board with the idea for Paradise Equity Partners?
When it was time for me to make the decision to start my own firm, he knew it was coming. I sat down and talked to him about it, and he got me with one of his partners from McColl Partners to go through all the things that it would take to help run a successful company. It just kind of snowballed from there.
Q. Can you go into more detail about the investment strategy for Paradise Equity Partners?
When you talk about sports, entertainment and tech, it makes it a broad market. But, it’s still a market that’s kind of untapped.
We try to identify companies doing anywhere from $5 million to $50 million in earnings before interest, taxes, depreciation and amortization (EBITDA). We look at strong companies where we can add value to the overall vision and a vision that we believe in.
They might need a CFO; they might need help with distribution; they might need help with licensing; they might need help with relationships to get into different markets. It can be anything to help get them over the top.
On the other side, if the company is a pre-revenue company, it’s the same thing. They haven’t made any money yet, and they’re looking to get off the ground. We’re looking at how we can add value to this company to make sure that we can get money back to the limited partners and either exit this at a multiple where everybody’s happy or take this company public.
Q. How involved do you see yourself being with these companies that you bring into the portfolio?
My involvement would be where I can really utilize my expertise. I think every situation will be different.
A company might need a chief technology officer. I can’t do that [laughs], but I will identify somebody to fill that role. If a company needs help with relationships from the NFL and NFLPA [NFL Players Association] or some of the trainers, that’s where I know I’ll be heavily involved.
They need help with finding opportunities in film and production companies, things of that nature, I have enough relationships to bridge that gap to bring those people in.
Q. Since you’re based in Charlotte, will there be interest in companies that are in the Charlotte area?
There’s no geographic area that we’re focused on because you’re talking about opportunities all over this country, really all over the world, when it comes to sports and entertainment.
I’ll get on a plane and go anywhere. I can always sit down in front of any potential opportunity to vet it. We’re living in a Zoom and Google Meet world, so I don’t think anything will be a hindrance for us.
Q. Anything else you want to add?
We’re really going to push opportunities within HBCUs. We’re starting to reach out to schools now for interns. We want to give some of these kids an opportunity to come on board and get introduced to the space.
We want to be intentional about making sure that that is visible to kids in HBCUs and some of the high schools in the area. This can be an option for them. If it’s not in my firm, at least we’ll prepare them to get a job at another firm.
We need more Black people in this space, and I’m going to make sure I do my part.