Duo hope to build on NWA retail sector
It’s a simple concept that excites Adam Kuettel and Christian Baldwin: connect retail ideas with retail experience and, possibly, retail money in such a way to create another level of economic activity around the Wal-Mart-infused retail sector in Northwest Arkansas.
Kuettel has been involved in finance and investments a little more than five years. He began in Fort Smith with Beall Barclay & Company in December 2007. After a series of jobs, he left Denver in August 2012 to be a managing partner at NWA Financial Partners in Bentonville.
“I knew what was happening here (Northwest Arkansas) and felt like there was an opening to provide that (investment advice) to the” Wal-Mart supplier community, Kuettel explained.
It’s a big community. An estimated 1,300 companies have offices within a 27-mile radius of the Wal-Mart Stores corporate headquarters in Bentonville. The companies have created around 6,000 high-income jobs in the area. The multi-tiered supplier community also creates a large pool of retail talent from a vast array of industries related to products, services and supply-chain logistics.
Baldwin has an engineering background and worked seven years in the retail industry. He’s been in Northwest Arkansas since 2006, and is the managing director of Black Diamond Mergers & Acquisitions. Black Diamond works with companies who have annual revenue of between $5 million and $100 million and operate in information technology, telecommunications, healthcare and/or retailer-based software and support services.
Although Baldwin and Kuettel work for different firms, they see a need in the retail sector to help in three basic ways:
• Secure funding for undercapitalized people or companies to develop a new product or service for the retail sector;
• Secure funding for people or companies with existing products or services who want to expand; and,
• Help find buyers and sellers for product and service companies within the retail sector.
And while the concept may seem simple, the details are anything but. However, Kuettel noted that in San Jose, Calif., (Silicon Valley area) there are numerous groups in place who help startup or existing tech companies. He thinks a similar environment should exist around the Wal-Mart world.
“Here in Northwest Arkansas, this is the retail capital of the world. So why shouldn’t that, that network of private equity for these (retail) ideas be here?” Kuettel said.
An example of who they want to help could be the small mom-and-pop operation that gets a product on the Wal-Mart shelves and it sells well. A Wal-Mart buyer calls and says they want to expand the product from two stores to 200 stores.
“That company is going to need the cash to do several pallets of products compared to just a few boxes,” Kuettel said, adding that the company may also need the expertise of former Wal-Mart vendors or retail execs on how to manage the growth and possibly expand to other retailers.
To provide that expertise, Baldwin said the collaboration between he and Kuettel includes working with retired execs “rich with retail experience.”
“A lot of these guys know and can see a diamond in the rough long before anyone else,” Baldwin said.
In that example, there would be at least a three-pronged process that would have to happen almost simultaneously.
• Contacts would have to be made with manufacturers to determine the costs and ability to produce more product at the same specifications.
• There would need to be an open dialogue with the Wal-Mart buyer to keep the shelf space available.
• Efforts would have to move forward on financing the increased production.
To further the example, Kuettel said several months down the road another company – possibly an existing and larger Wal-Mart vendor – may see the product and want to buy it and the company.
“And so we could work that deal,” Baldwin said.
Jeff Amerine, an entrepreneurial advisor in Northwest Arkansas and director of technology licensing for the University of Arkansas, said he is not familiar with Baldwin and Kuettel’s collaboration, but welcomed their efforts.
“There is plenty of room in this area for people with innovative ways to connect savvy capital with good ideas,” Amerine said.
Amerine’s job was created earlier in 2013 to streamline the process of moving ideas out of the university’s research programs and into the economy. He joined the university as a technology licensing officer in 2008 after an 18-year career as an executive and builder of technology businesses.
Amerine said Northwest Arkansas is becoming more successful in attracting private equity and other resources to support ventures related to retail and many other sectors.
“We’re just at the beginning of the beginning with this process. … It’s an exciting time,” Amerine said of the effort to increase private equity support in Northwest Arkansas. “I’m pleased to hear that more of this is happening. That builds upon a lot of what is already happening.”
Amerine also said he hopes Baldwin and Kuettel are able to attract local venture capital to ensure that startup companies remain in the region.
Baldwin and Kuettel are less than four months into the effort and are pleased with the results. As of June 7 they had seven “deal opportunities” brewing with two above $40 million.
“The market response has been remarkably great,” Kuettel said.
If the first efforts prove successful, the two hope to push the collaboration beyond $40 million deals.
“With this (process), we could also do some very big stuff with the big brands,” Kuettel said.