December 03, 2024 | Read Online

Gratia

youngest son

Bain & Co. is a management consulting firm founded in 1973 by a former BCG consultant named Bill Bain.

While Bain is the youngest of the big three (McKinsey - 1926, BCG - 1963), the firm has found an edge as the most entrepreneurial consulting firm in America, perhaps even one of the most entrepreneurial companies point blank.

More than 40 unicorns ($1B+) founded by Bain alumni since mid-1990s
$25B+ in venture and growth funding for Bain founders
8% of Bain employees start their own venture; more startup founders per capita than any other business

Famous Bain founders include:

Scott Cook. Worked at Bain in Menlo Park before founding Intuit in 1983. The idea came to him after his wife complained about remembering to pay the bills. Intuit is now a $179B company, and Scott is worth over $6B. He donated the max to Mitt Romney in 2007
Mitt Romney: Started as a consultant at Bain in 1977 and worked his way up to the CEO position. From there, he founded a private equity arm, Bain Capital, that now has over $186B AUM.
Zach Perrett: Met his co-founder, William Hockey, while working as a Bain consultant in New York. The two ex-Bain founders launched Plaid in 2012 and turned down a $5.3B Visa acquisition offer. Read more about it here

In today's memo, we will go behind the scenes of a startup run by an ex-Bain founder

family ties

The story starts at Goldman Sachs

Sarah Tomita recently graduated from Yale and was an analyst in the Consumer / Retail group at Goldman.

She was thrown into the deep end early on, working on two blockbuster transactions in her first two years:

Lululemon IPO: the active-wear company raised $327M in a public offering at a price of $18 / share, well above the expected price range of $10 - $12 / share. Goldman Sachs and Merrill Lynch led the transaction
Dr Pepper Snapple spin off: Dr Pepper Snapple Group spun out of Cadbury Schweppe's and began to trade on the public markets in the U.S. (NYSE). Dr Pepper Snapple was later acquired by Keurig Green Mountain in 2018 to form publicly traded company Keurig Dr Pepper.

It took just five years for Tomita to get promoted from Analyst → Associate → Vice President.

After a few years at the VP level, Sarah took her talents to the Bay Area.

Over the better part of a decade, she acquired ample accolades career-wise:

Vice President at U.S. Capital Partners. P&L ownership for over 145 clients
COO of Regulatory Professionals. Led the company in a successful M&A sale to Premier Research, at a significant premium to the last valuation
Senior Vice President at Revolution Foods. Led the company's largest fundraising round to date (Series L)

Along the way she discovered a passion for independent consulting. Her experiences with M&A, investor relations, and strategy made her a valuable expert to startups and enterprises alike. While working with Graphite, an expert network, Sarah met Jackie.

Jackie and Sarah hit it off quick, trading ideas over cups of coffee. Jackie was a former investment banker like Sarah, Sarah was an independent consultant like Jackie. The two talked about the difficulty of getting reliable, high-quality, cost-effective talent for consulting projects. When Jackie told Sarah that she was working on a startup to address this need, something clicked.

But the final star aligned when Sarah learned about Jackie's middle name.

Jackie is a quarter Japanese and her middle name is Michiko, after the Japanese Empress.

Sarah is also Japanese, and her mom's name is Michiko.

Sometimes the story writes itself.

Before founding Gratia, Jackie:

was a consultant at Bain
worked in Citi's Investment Banking Division
led company turnaround as Head of Strategy & Operations at WeWork
founded an independent consulting firm that scaled to $4M in rev

the plan

In the U.S, young professionals are experiencing a historically high level of job turnover.

→ According to Forbes, in the past four years, 73% of Gen Z workers changed jobs while just 44% of Millennial workers did the same.

→ Employers have been losing an unprecedented amount of money on entry level job turnover since COVID.

→ Entry level roles are hardest to fill because candidates do not have track records.

Jackie and Sarah ran into difficulties hiring young talent to assist them on complex consulting projects. The most painful problems are often the most lucrative opportunities

Gratia serves both entry level talent and companies looking to hire:

Analysts: Gratia trains and staffs analysts, replicating the strengths of top analysts in banking/consulting programs.
Companies: Gratia offers vetted analysts for short - long term projects at competitive rates. In some cases, companies hire their Gratia analyst full-time for a fee.

A unique feature that distinguishes Gratia from competitors is the laser focus on quality analysts + upskilling.

Analysts on Gratia's platform must complete comprehensive training beforehand, and there are no guarantees for placement within the program. Gratia's analysts develop the skill-set necessary to work with all types of clients, from startups to enterprises. Compare this to Upwork or Fiverr, where quality is highly variable and clients are often frustrated with results.

Upskilling refers to the ability for analysts to level up through work experience and assessments. Analysts can upskill from Analyst I to Analyst II to Consultant I and so on, commanding higher hourly rates at each point.

Gratia has quickly grown to a 7-figure operation, with plans to reach stratospheric scale in the next five years

Comps include:

Upwork: $2.2B valuation (IPO, 2018)
Multiverse: $1.7B valuation (Series D, 2022)
Fiverr: $1.2B valuation (IPO, 2019)
Andela: $1.5B valuation (Series E, 2021)

If it all goes well, that's unicorn #41 for Bain

Last Deal: Gratia

We are investing in Gratia's seed round through a Mainstreet SPV.

Gratia is raising $2M on a SAFE note at a very reasonable $8M post-money valuation.

The company is nearing profitability and this will be one of their last rounds of funding.

Minimum investment: $5,000

We will be hosting a syndicate call with Sarah (COO) this Friday, December 6th, at 6pm ET

Reply to this email for a call invite, additional materials, or questions

Headlines

Public raises $135M for AI driven investment. Crunchbase article here
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Kylie Jenner's seltzer deal signals China VC investor's global push. Financial Times article here