Timbuk2 bagged by new private equity firm

The equity investment is led by a new San Francisco private equity fund, VMG Equity Partners, and the Washington, D.C.-based fund, Capital Logic Partners.

Timbuk2 remains independent and privately-held, and its current CEO, Mark Dwight, will continue to lead the company.

Three years ago, Dwight led a group of private investors and a local institutional investor, Pacific Community Ventures, to purchase the 16-year-old company. Since then, Timbuk2 has reorganized its operations, expanded its product offerings and distribution, and achieved profitability. In the process, the company’s annual revenue has more than tripled.

“This is a proud moment in Timbuk2’s history,” said Dwight. “We have delivered a significant return to our initial investors – nearly four and a half times their original investment in just three years. Our new investors provide the financial resources and strategic marketing expertise to fuel our next big growth phase.”

Timbuk2 was founded in 1989 by a San Francisco bicycle messenger, and is known for its colourful, three-panel messenger bags. These custom bags are still manufactured in Timbuk2’s factory located in the Mission District of San Francisco.

Though the Company also manufactures products in China, Dwight says he is committed to maintaining the San Francisco manufacturing presence.

“Our San Francisco factory is a novelty in the current age of outsourcing and offshoring – but we have carved-out a special niche making high-quality custom bags.”

Dwight says customization, efficient manufacturing, and consumer-direct sales via the Internet allow the Company to offset the high cost of labour in San Francisco.

The sale of the company is not only good for investors, but employees as well. The transaction triggers a cash bonus to Timbuk2’s non-management employees who all participate in the company’s Employee Wealth Sharing Program. The program was established by Dwight and the company’s previous majority investor, Pacific Community Ventures (PCV).

Eduardo Rallo, MD at PCV and previous Timbuk2 board member. said: “PCV’s investors are receiving a well-above-market return on their investment, while Timbuk2’s lower-income workers are sharing significantly in the financial upside of the value they helped create.”

Dwight said: “Our company-wide wealth creation program rewards all of our employees for their hard work and dedication over the past several years. We will distribute more than $1m to 40 employees in a one-time bonus. This is the type of event we typically associate with high-flying Silicon Valley technology companies, and it’s proof that business success comes in many forms in our vibrant Bay Area economy.”

The cash payout to each employee is based on a formula accounting for tenure, grade level, annual salary, and performance, and can be as much as two-times annual pay. Over half of the employees receiving the payout work in factory and warehouse positions, and reside in low/moderate-income communities targeted by PCV, such as the Chinatown, Bayview, Outer Mission, Hunters Point, and Richmond districts of San Francisco.

http://www.timbuk2.com