Westward Ho!: Equity startup funds a dozen ventures in first year

Ryan O’Reilly got tired of hearing pitches for business ideas from would-be entrepreneurs around town. So a year ago, he took action.

He and partners have been busy since.

Westward Alliance LLC, a private equity venture launched in October last year by O’Reilly and former banker Reed Hopper, has now invested in 13 businesses from Springfield to Phoenix in industries as diverse as dining, construction and automobile financing.

“We like to join forces with entrepreneurs – you know, facilitate equity, development, efficiency,” O’Reilly said. “We like the entrepreneurial mindset because these are people who can operate independently.”

In January, for instance, Jason Graf and Paul Freeman, co-owners of restaurant startup BYOPizza, entered into the private-equity partnership with an undisclosed equity trade in the create-your-own-pizza brand.

Each deal is different with O’Reilly and Hopper.

Westward Alliance doesn’t typically deal in cash. The business partners declined to disclose their investment portfolio assets or typical deal terms, but through lending partners such as Springfield First Community Bank, Westward Alliance secures funding for projects upfront in return for an ownership stake in the company.

Deals are often structured for original owners to gain back equity as identified sales goals are met. Currently, Westward Alliance is a majority owner in 10 companies out of its 13 investments.

Two moves occurred on Sept. 1. The private-equity firm formally partnered with former DeWitt & Associates Inc. project manager Cody Ritter to launch Base Construction & Management LLC, and Westward Alliance closed on the purchase of the central U.S. territory rights of national brokerage firm Murphy Business & Financial Corp. The idea behind the latter is to generate possible investment leads.

Another recent investment for Westward Alliance is a 80 percent stake in Aviary Shares LLC, parent company of Aviary Cafe and Creperie LLC. A key component is distribution potential for Aviary’s popular pommes frites in grocery stores.

“Pommes frites are by far the best seller at Aviary, so we are looking at doing a distributed product line for them,” O’Reilly said.

A key player in the edible ventures is Corinna Baban, who Westward Alliance hired from Red Monkey Foods.

“She is transitioning out,” O’Reilly said of Baban’s three years as vice president of operations at Red Monkey Foods, which sells its spices into retailers including Target and Hy-Vee. “She is Six Sigma certified and a specialist in efficiency and standardization.”

In her new role, Baban also will work on franchise development for BYOPizza, an early idea that never gained traction. O’Reilly, grandson of O’Reilly Automotive Inc. (Nasdaq: ORLY) co-founder Charles “Chub” O’Reilly, said the partners regard Baban as instrumental in charting a growth path for BYOPizza.

He said between companies, there would be some crossover in terms of supplying products and services. For example, the Aviary is supplying dough for BYOPizza. “So, we have better quality than you would normally find in a fast-food pizza place,” O’Reilly said.

Among its first-year deals is the Auto Concierge automobile glass-repair business serving the Phoenix and Houston, Texas, markets.

“That was an established company we acquired, operating out of Houston, and literally last week we launched in the Phoenix market,” Hopper said.

Operations are expected to arrive in Springfield in time. Auto Concierge’s proprietary insurance-filing software was attractive to the Westward Alliance partners.

“It’s a truly automated process, which is what differentiates us from the competition,” Hopper said, adding Phoenix is a prime early-stage market because there is a lot of traffic and a lot of sand and rocks to damage windshields.

Josh Tarbet, who co-founded a company that provides capital to car lots, said he signed an agreement with Westward Alliance in April to help grow the nearly 2-year-old venture, Springfield-based Commander Financial LLC.

“Our business is to lend operating capital to independent car dealerships, so they can have inventory on their car lot,” Tarbet said.

He declined to disclose terms of the Westward Alliance deal.

“I was already established and had a proven model. Mine is a very unique business venture,” Tarbet said. “I’m more of the consultant and they’re there to help me grow it.”

Dubbed “floor plans,” the loans to auto dealers represent a market many lenders don’t regularly serve, said Hopper, who previously worked in lending with OakStar Bank and Commerce Trust Co.

“We really like that one as an example of the kinds of investments we like to make,” O’Reilly said. “It’s something that not only has identified a market need and is filling it, but also has some sort of advantageous proprietary operation aspect like this software.”

Westward Alliance’s future headquarters is a renovation project for Base Construction – the former Murney Associates, Realtors office at 620 W. Republic Road. Currently, Westward Alliance operates in the former Jordan Creek nightclub building, 323 N. Patton Ave., Ste. 203.

Real estate is part of the portfolio via startup Base Realty. Now, Westward Alliance is in a position through its holdings to assist entrepreneurs seeking commercial real estate for development.

Through startup Latitude 36 Resort LLC, organized in August, the partners plan to launch an environmentally friendly boutique resort concept built around boating and hiking. They’re targeting Branson for the first resort, which could include tree houses.

Also, through Jamesville Farms Co., Westward Alliance has helped secure 300 head of cattle. In the short term, O’Reilly said beef is volatile, but long-term, its value is always going up.

Hopper and O’Reilly said there is a natural ebb and flow to the deals. Now entering a period of stabilization, the private equity firm with over 100 employees combined is focused on supporting existing ventures before actively seeking additional deals. But then again, they say a manufacturing or service business valued at $250,000 or more sounds pretty sweet.

The eye is on a stage well beyond O’Reilly’s hometown.

“I, personally, would like to see business startups that grow from Springfield enter a national stage,” O’Reilly said. “We’ve seen businesses start in Springfield go national before.”

O’Reilly and his family have lived that story.

What started with Chub O’Reilly’s automotive vision has blossomed into a $7 billion publicly traded company with parts stores across the United States. His descendants have gone on to accomplish their own business goals outside of the family company. Grandson Tim O’Reilly charted his own course as the managing member and CEO of O’Reilly Hospitality Management LLC and a partner with law firm O’Reilly, Jensen & Preston LLC. O’Reilly Hospitality’s portfolio includes 11 hotels – such as the DoubleTree Hotel and the Hilton Garden Inn in Springfield – and five restaurants in six states. His cousin, Matt O’Reilly, is founder of Green Circle Projects LLC and developer of the $22 million Farmers Park mixed-use development on East Republic Road, which is now home to brother Austin O’Reilly’s biomedical and genetic testing firm, Dynamic DNA Laboratories LLC.