“Why did you send me this renegade from the human race?” According to Silicon Valley legend, that’s exactly what venture capitalist Don Valentine asked the man who set up a meeting for him with a young Steve Jobs.
Valentine decided not to invest in Apple. But introduced an acquaintance, Mike Markkula, to Jobs.
In 1977, Markkula, already a multi-millionaire and former executive at Intel, invested $250,000 for a 33% stake, eventually becoming Apple’s CEO. As deals go, this turned out to be something of a snip.
Although Venture Capital and Private Equity companies usually invest at different stages of business development – VCs preferring start-ups, PEs scale-ups – Apple’s origin story partly helps explain why so many of today’s successful businesses are deciding not to go public. Instead, opting for private equity capital to fund their expansion.
Because Mike Markkula didn’t just bring cash to Apple. He brought something more important. In addition to providing what The New York Times described as "adult supervision" to Jobs and partner Steve Wozniak, he had business skills, connections, and experience they didn’t have.
Many modern entrepreneurs have perfectly understood this lesson.
As the Daily Telegraph recently commented, “Over the same period as public markets have declined in stature, private equity has burgeoned into a major asset class. Specialist private equity funds with a dedicated sector focus have also arisen, with years of experience creating value for similar businesses. That is valuable expertise.”
So, pick the right PE investor, and their deep sector experience can help drive your business forward just as effectively as their access to capital can.
The Telegraph again, “You don’t need to educate your investors every time you report results; instead, you have a backer who is as familiar with the details as you are.”
And, the paper continues, “Increasingly, private equity-owned businesses will have access to investor’s in-house bench of industry experts. That might include experts – typically former businesspeople themselves – on things such as procurement, digital transformation, AI implementation, decarbonisation and energy optimisation, internationalisation and more.”
Mike Markkula's initial investment in Apple yielded a 220,552% gain, making his shares worth $203 million. A canny bet on his part. But crucially, his early know-how helped Jobs, and his team, go on to become the world’s most valuable company in 2011. Famously, Apple’s logo is a symbol of knowledge. For Jobs, Markkula’s was key.