A Massachusetts-based firm has made a substantial investment in Coast of Maine Organic Products, facilitating an exit for two of the Portland company’s early local investors.
If you’ve ever done any gardening or spent time at a garden-supplies store, you’ll know Coast of Maine as the compost company whose colorful bags carry a very Maine painting of an island in a bay.
The company was founded in 1996 and two of its earliest investors were Maine Venture Fund (known at the time as the Small Enterprise Growth Fund) and Coastal Ventures L.P., an investment fund managed by CEI Ventures.
Maine Venture Fund invested $100,000 in Coast of Maine in 2000, according to John Burns, the fund’s managing director.
Burns confirmed to Maine Startups Insider that Gemini Investor’s investment in Coast of Maine had facilitated an exit for Maine Venture Fund. He said the return on that initial investment equaled an annual rate of return equal to “north of 10%” over the 16 years of the investment.
“This was a long investment in a company that did well and was well managed over many years,” Burns told Maine Startups Insider. “It was never going to be a rocket ship in terms of scale and that sort of that thing, but they created a nice profitable business that continued to expand each year and improve its margins.”
An exit like this, while not exactly rare, is noteworthy. Maine Venture Fund made its first investment in December 1997. Since then it’s had roughly 10 exits of varying size, the largest being a 10x return over four years on its investment in the early 2000s in Portland-based Recruiternet. Burns said the size of the Coast of Maine exit falls about in the middle of the range.
Exits are also good news for the larger startup community because it means Maine Venture Fund has new capital it can now put back to work in the community.
“[An exit] is a wonderful occurence and it happens with irregularity,” Burns said. “Given the nature of our fund, these exits and the return that comes back into the fund allows us to use the capital to look for good Maine companies to invest in.”
An attempt to reach Nat Henshaw, managing director of Coastal Ventures, was unsuccessful on Friday morning.
Details of Gemini’s investment were not disclosed, though it is being called a “recapitalization” rather than an acquisition, according to a news release issued by a firm that served as an advisor on the deal. Coast of Maine will continue to be led by its existing management team, including Carlos Quijano, its president and founder.
“As we embark on our next stage of growth, Coast of Maine is delighted to partner with Gemini Investors, who has deep experience in developing entrepreneurial businesses,” Quijano said in a statement.