Activa Marketing & Investment Group LC, Miami, a private equity and specialized communications shop, said catalog and direct marketing companies are its first choice when it comes to placing capital in communications startups.
According to president Jose R. Azout, Activa is most interested in funding firms that are profitably prospecting for new customers but require financing to grow to the next level.
Activa, which this week acquired the Tiburon Apparel Catalog, is working with The Catalog Consultancy, a full-service mail-order and direct marketing consulting shop, to help develop the operational and planning functions of the firm.
According to Sidney Kerber, president of The Catalog Consultancy, Coconut Creek, FL, Tiburon is the typical growth company that Activa hopes to find more of in the near future. But for Activa, prospective businesses don't have to be similar to Tiburon, a merchandise book focused on washable, dryable, preshrunk women's clothing and accessories.
Kerber said one of the best direct marketing company investments is the second stage catalog company.
“I would say that there are many catalog companies in their third or fourth year that have reached this point,” Kerber said. He added that such companies are solid investments even if they've not yet shown a profit. But certain criteria do have to be met: They must have a history of prospecting success, strong management and a product or service that has growth potential.
Direct marketers know it's often challenging to move any promising merchandising company out of the startup period, especially in apparel direct mail where it can take considerable time to build up a viable house mailing list. And the amount of capital required depends on the products, forecast and expectations of the investor.
Kerber said the range is hard to quantify but estimates that $200,000 is on the high end.
Prior to establishing The Catalog Consultancy, Kerber was vice president of marketing of The King-Size Co., a division of The Knapp King-Size Corp., a national retail and direct-selling marketer of shoes and apparel.
Activa is a privately held company.