The poster that dominates the waiting area at the Valor Equity Partners Chicago headquarters isn’t a generic watercolor of neutral tones. It’s an enlarged memorandum sent by Antonio Gracias, founder and CEO, to his colleagues. Four words presented as tenets for the company are bolded: excellence, humility, integrity, and responsibility.
But there is another word that defines both Gracias and Valor that isn’t emblazoned in the lobby: tenacity. If Chicago is famous for having rebuilt itself as one of America’s most important cities after burning completely to the ground, Gracias’s own business parallels the city’s narrative of resilience. Valor invests in high-growth companies to help them scale.
Valor’s office looks out at the wide expanse of blue-gray that is Lake Michigan. It’s cornered between the Chicago Symphony Center and the Art Institute of Chicago. Books filled with glossy color photos and neatly stacked in columns on a wooden table in the waiting area explore many facets of Chicago life: Lake Michigan, downtown, Illinois, the Midwest, and the Great Fire. In every sense, both within and on the surface, Valor is a Chicago company that embodies the Windy City’s tenacity.
In 2008, as the national economy buckled under the burden of the financial crisis, Tesla Motors stood on the verge of collapse. The company couldn’t raise the capital to fund research and development. Tesla announced it would lay off nearly one in four of its employees. Few businesspeople were willing to take risks at the time; most were simply trying to survive. But Gracias and Valor chose to take the risk and invest in the automotive company. Gracias knew that Tesla had talented and creative individuals supporting a growing technology. Four years after Valor’s intervention, Tesla posted $385.7 million in sales—a 2,600 percent increase from 2008. “It was a moment in time that really defined me,” he says, now with six years of perspective, “not just as an investor, but as a partner and as a person.” For the first quarter of 2014, Tesla Motors generated an impressive 100 percent variable gross margin year over year while gross profits rose $59 million year over year. “Ultimately, the economy will be in a better place if we can help high-growth companies grow faster,” says Gracias, now a member of Tesla’s board of directors. “They will increase employment and produce life-changing products.”
Antonio Gracias bought his first business while studying law at the University of Chicago and has more than 20 years of experience investing in various sectors. In 2001, he founded Valor Equity Partners and chose to headquarter the company in Chicago. With an unemployment rate 1.6 percent higher than the national average and a corporate income tax rate at seven percent (also higher than the national average), Illinois is often maligned for its unfriendly business environment. These problems didn’t change Gracias’s desire to own a business in Chicago. Rather, he’s taken it upon his firm to be part of the solution. “I don’t see the environment as difficult,” he says. “There are challenges, but what defines you is how you deal with those challenges. The state is beginning to address those challenges, and it’s up to us as business leaders to be maximally supportive of the process.” With all of his passion for the city, Gracias will be the first to tell you the real reason he chose to set up shop in Chicago was to be close to his family.
When he talks about them, a smile spreads across his face. His parents are immigrants and had high expectations for their children. “I have two brothers who are doctors, my sister is a dentist, and I was going to be the lawyer of the family,” Gracias says. He ended up being the entrepreneur.
Gracias has also lent his guidance to the city as a member of the Commercial Club of Chicago, the Clean Energy Trust, the board of directors of the Economic Club of Chicago, the board of directors of World Business Chicago, the board of visitors of the University of Chicago Law School, and a trustee of the Field Museum.
Chicago’s business environment doesn’t frighten Gracias, at least in part, because he never goes into a decision blind. Valor always knows the inner workings of a business before its leaders decide to invest in it and help it attain higher growth and scale. The firm often chooses companies in which they can see the potential to help a growing venture scale faster and more efficiently, and that attitude has helped Gracias build a brand that includes enterprises as seemingly disparate as Little Caesars and Tesla Motors. As he speaks about the companies in which he’s invested, Gracias punctuates his words by spreading his hands across a conference table and outlining bullet points. “When we stand alone, and other people don’t see what we see, that’s when we make the best investments,” he says.
At Little Caesars, Valor’s internal engineers devised efficient processes for everything from food preparation to stocking pizzas. Valor doesn’t follow the normal practice of equity firms (buy up, lay off, break down). Instead, it tries to build upon what’s already there. His firm’s objective is to grow businesses and enhance their value by bringing them to scale. “We are investing in high-growth companies,” Gracias asserts, “but, fundamentally, we are investing in great people.”
As Valor continues to build momentum, it has begun narrowing and specializing its scope. Gracias says the company continues to pursue the projects its leaders are most passionate about, such as improving operational techniques.
“We’ve done operations turnarounds, and we’ve been operating managers,” says Gracias. “We’ve realized that the thing that excites us the most—that wakes us up in the morning—is working with great growth companies with terrific teams in place. And that’s what we’re going to continue to do.”