When things work people pay attention: Harry Sloan on rapid rise of SPACs
Andrew Wilkinson didn’t even know what a family office was until people started using it in reference to Tiny Capital, his tech-focused holding group.
A college dropout from Vancouver, British Columbia, Wilkinson, 34, wasn’t steeped in the ways of the ultra-wealthy when he started Tiny five years ago. The self-taught web designer founded an agency soon after high school that grew rapidly building interfaces for Silicon Valley clients such as Pinterest Inc.
“I was operating at very high margins and my bank balance kept getting bigger,” Wilkinson said. “I didn’t really know what to do with the money and all I knew how to do was start businesses.”
So that’s what he did, concentrating initially on software that serviced the budding online retail industry. Today his empire comprises 30 companies with a combined value he estimates at $600 million to $1 billion. Though he said his general strategy is to hold the businesses for the long term, the ease of listing through a special-purpose acquisition company, or SPAC -- what he calls “the least painful way to go public” -- proved too tempting.
On Monday, his company WeCommerce Holdings Ltd., which creates and invests in companies servicing Shopify Inc.’s retail platform, will list its stock on the TSX Venture Exchange. It’ll be done through a reverse takeover of Brachium Capital Corp. after closing a private placement offering for $60 million, co-led by Canaccord Genuity Corp. and TD Securities Inc.
Bill Ackman, who Wilkinson met when he won a charity lunch auction with the billionaire, is an investor in WeCommerce alongside a Tiny-owned entity that’s 80% owned by Wilkinson with his partner, Chris Sparling, holding the balance, according to filings. Tiny makes up virtually all of Wilkinson’s net worth aside from some real estate and stocks, he said.
While the pair founded WeCommerce, the majority of Tiny’s businesses, including design talent platform Dribble and Girlboss Media Inc., were acquired. Wilkinson envisions the firm as a kind of Berkshire Hathaway Inc. of small tech companies. He became a disciple of Berkshire’s Warren Buffett after experiencing burnout trying to run five businesses simultaneously in 2014.
“It just kind of blew my mind that you could have someone who’s one of the wealthiest people in the world and all he does is hire CEOs, incentivize them and let them do their thing,” Wilkinson said.
Like Buffett, he strives to complete deals quickly, in under 30 days. He promises founders long-term, hands-off ownership by a like-minded entrepreneur. He and Sparling had been courted by private equity in the past and loathed the process.
“They were always these Wall Street” MBAs that we didn’t relate to, he said. “They looked at our business like a spreadsheet.”
To be sure, Tiny isn’t all that dissimilar from private equity. The firm is intent on owning profitable businesses, with earnings being the ultimate engine of future acquisitions. And a large part of Wilkinson’s role is installing CEOs who he says he leaves alone to manage the company how they see fit. The key difference is Tiny isn’t looking to exit within a short time span and their growth demands are lower.
This year’s frothy tech valuations have made acquisitions harder, he said. Tiny looks at 50 to 100 companies a month and on average buys three to five a year. They often compete with venture capital and private equity firms where their edge is their founder-friendly, buy-and-hold ethos and all-cash offers. And generally valuations are more straightforward in the relatively vanilla area of tech they focus on.
“I always joke we’re like the auto dealerships and dry cleaners of the internet,” Wilkinson said. “They’re not doing some crazy futuristic stuff. They’re just helping people connect.”
--With assistance from Melissa Karsh.