New fund by FedCap Partners

FedCap Partners LLC has closed a new $20M private equity fund targeted at small Federal contractors in the defense and intel sectors. From their press release, FedCap describes their strategy as follows:

Two primary factors have disproportionately adversely affected small and medium sized Federal contractors in recent years. First, the continuing "capital crunch" has impacted Federal contractors under $50 million in revenue and minority equity capital is in short supply. Secondly, the Small Business Administration's ("SBA") recertification rule has made it much more difficult for companies with 20% or more in "set-aside" revenue to sell and receive fair market value for their businesses. FedCap expects to partner with owners of companies impacted by these issues and provide capital and advice to transition contracts and accelerate growth.

The fund managers/owners are Rick Knop and Leslee Belluchie. Knop previously founded the defense investment banking specialists Windsor Group (now part of BB&T Capital Markets). Belluchie is a former Executive VP for SI International, by way of business development posts at CSC. A board of advisors with 7 members is also listed on their work-in-progress website.

We'll be looking forward to info about their first deals. From the description above it is hard to judge exactly what they are trying to do. Minority stakes in small businesses? I can't see the exit there, but FedCap maybe has something figured out.