Women in PE to Know: Leslie Frécon

March 18, 2020

The interview below is part of an ongoing effort by McGuireWoods to profile women leaders in private equity (PE). To read previous profiles, click here. To recommend a woman for a future interview, email [email protected].

Leslie Frecon

Leslie Frécon is managing partner of LFE Capital, an investment management firm she founded 19 years ago to provide capital and expertise to emerging growth companies. LFE Capital invests in second-stage businesses in the health and wellness sector, focusing on businesses with female ownership and management. Prior to founding LFE Capital, Frécon was senior vice president, corporate finance, for General Mills. In that position, she was responsible for the treasury, corporate development and risk management functions and, as a member of the senior executive team, worked with operating management to develop and execute growth strategies. Prior to joining General Mills, Frécon was a commercial loan officer with Bank of America in Los Angeles, managing banking relationships for manufacturing and agribusiness companies.

Q: What attracted you to PE?

Leslie Frécon: When I left General Mills over 18 years ago, I wanted to do something entrepreneurial. Several colleagues encouraged me to go into PE because of my background in corporate finance, mergers and acquisitions, operations and strategy. When I researched PE, I was amazed to discover that, while women owned almost a third of all businesses and were starting businesses at twice the average rate, less than 5 percent of PE capital was being invested in that segment.

I started meeting with women business owners and leaders, as well as with PE and venture capital partners, and the disconnect was obvious. I launched LFE Capital to back women-owned and -led businesses. I guess you could say what attracted me is what attracts most entrepreneurs: I uncovered a large, unmet market need. Furthermore, I believed that I had the skill set and network to source, structure and help build successful businesses. Raising that first fund was one of the most difficult things I had ever done.

Q: Why is it important for more women to pursue careers in PE?

LF: Today, believe it or not, the statistics are roughly the same as when I started LFE. While that is discouraging, what has changed is the market awareness of the issues: women’s access to capital and the PE culture. The only way culture and access to capital are going to improve for women is for more women to get into the business. It is proven that PE firms with female decision-makers make more investments in businesses with female ownership and management. In addition, firms with diverse management teams — gender and ethnicity — perform better. In particular, the complexity of the analysis and decision-making that PE management entails supports having a diversified team to optimize outcomes. At LFE, we have experienced that time and time again, starting with our own team and at all of our portfolio companies.

Q: Why do you actively support providing capital to women entrepreneurs?

LF: It makes business sense on numerous levels. There are statistics that demonstrate higher rates of success for women-led companies, plus LFE has developed a reputation as a preferred partner to women-led businesses, thereby providing it with a competitive advantage when sourcing deals. LFE’s mission is to connect women leaders to capital and to build successful health and wellbeing businesses. As the key healthcare decision-makers in families, women start a large percentage of their businesses in health-related areas. Last but not least, it is a large and growing market that offers attractive returns.

Q: Why is it important for more women to pursue entrepreneurship?

LF: Entrepreneurship has many attractive characteristics, but it is not for everyone. As the CEO of a major financial services company once said to me, “The best way to be CEO is to own your own business.” With that leadership and responsibility comes autonomy, personal fulfillment and financial rewards, but it takes perseverance, trust in oneself, a high energy level and skills. Today, there are entrepreneurship programs that offer the tools to increase the chance of success.

Like anything else, you need to be able to learn from your mistakes and adapt quickly to adverse developments. To quote another successful entrepreneur: “The highs are higher and the lows are lower.” I have had the fortune to work with talented and resourceful female business leaders who have found owning and/or building their own business very rewarding and who have been able to combine it with a family life.

For the global economy, female entrepreneurship is a significant source of job and wealth creation.

Q: What advice would you provide to a woman-led company interested in securing PE?

LF: Do your homework. Every established PE firm has a website. Understand what types of business they invest in — stage of development, industry, size of investment — before you contact them.

If you believe there is a fit, try to find a personal introduction.

Have a professional deck of slides that describes your business model, team, financial performance and forecast, growth plan and use of capital. Hire a professional to help you put this together if you lack the skills in-house.

Consider the pros and cons of taking capital from many small investors. This can create issues later on if you wish to secure institutional capital.

Understand the expectations of your investor — in terms or reporting, communications and timing of return of capital — to minimize future conflicts.

Remember, it’s a partnership. That means the parties need to be able to work together over a long time period. There needs to be a basic level of trust and respect to get you through the inevitable bumps in the road.

Be prepared to kiss a lot of frogs. It’s a long process.

Q: Can you share a personal story that you feel exemplifies the value of women entrepreneurship?

LF: I believe that LFE Capital is the longest female-owned fund manager focused on investing in businesses with female ownership and management in existence. In the early years, it felt like missionary work, explaining the underserved market to a largely male audience, and how we were positioned to capitalize on it. Today, we have a robust deal flow, a core team with a long history together and a solid track record of finding quality investments and building businesses of interest to strategic acquirers.

While there is much work to be done, I am hopeful that female entrepreneurs and PE professionals can leverage the growing market awareness of this opportunity, to increase their participation and success.

To contact Frécon, email [email protected].