Some kids grow up wanting to be a rockstar. Some want to be a professional athlete. Nicholas Antoine always wanted to be an investor. When he was a student at Princeton to study history in the early 2010s, it was a hard fact for his friends to miss.

“I invested in my dorm for years,” says Antoine, now 33, “and I was constantly talking about Warren Buffett, Benjamin Graham, and Charlie Munger.”

So Antoine’s ears perked up when, early in his senior year, he learned that a friend had just returned from a summer internship in Chicago at Ariel Investments, the world’s oldest mutual fund company. owned by local blacks. The friend offered an introduction to John W. Rogers Jr., the founder of Ariel, a value investor in the mold of Buffett and Graham. Antoine sent a letter – Rogers is not an email guy – and wondered if he would ever get a response.

Finally, the phone rang. It was Rogers, calling from Nebraska, where he was on his way to a meeting with the Oracle of Omaha himself.

“He called me and we chatted for 45 minutes or an hour,” Antoine recalls. “And he’s like ‘Okay, well, I have to go, I’m going to meet Warren. But why don’t you come to Chicago?’

This is how Antoine’s journey into private equity began. At 23, Antoine moved to Chicago, where he spent a year working as Rogers’ chief of staff, accompanying the contrarian value investor to meetings and events and receiving a unique crash course. of its kind on the operation of an investment business. Mellody Hobson, President of Starbucks

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who now works alongside Rogers as co-CEO of Ariel, filled a similar role in the 1990s in his first job at Princeton.

While at Ariel, a colleague introduced Antoine to Chad Strader, a young investor working in the supply chain space at Chicago-based private equity firm Woodlawn Partners, who had recently graduated with an MBA. at the University of Chicago. They hit it off, swapping book recommendations, investing strategies and dreaming of starting their own business. Before long, they decided to stop waiting. “If not us, then who?” said Anthony. “If not now, then when?” The two teamed up in 2015 to start Red Arts Capital, presciently identifying supply chains as an overlooked market niche that also overlapped with their areas of expertise. Both were 26 years old.

After seven years of steady growth — they’ve closed deals worth around $200 million to date, backed by funding from Rogers and other deep-pocketed friends and advisers — Antoine and Strader raise their first institutional fund targeting the buoyant logistics sector. According to PitchBook, private equity investments in logistics hit an all-time high in 2021, surpassing $50 billion. Last December, Red Arts recorded its first exit, selling a Midwest shipping company called Midwest Motor Express to Knight-Swift Transportation for $150 million, representing a nearly 8x return. With that first track record to bring to LPs, the company is now raising $225 million.

Previously, Red Arts raised capital on a case-by-case basis from its network of benefactors. Besides Rogers, other Red Arts backers include billionaire investor Mario Gabelli and John Canning, founder of Chicago-based private equity firm Madison Dearborn Partners. In addition to providing capital and advice, these investors offer an imprimatur that Antoine and Strader believe can go a long way in introducing Red Arts to potential portfolio companies.

“We surrounded ourselves with the smartest people,” Strader says. “I think it’s part of our secret sauce.”

For Rogers, investing in the upstart company was an easy decision. When Antoine was Rogers’ precocious chief of staff, he quickly established himself as a strategic sounding board. “He has very good judgment,” Rogers said. He was also drawn to the fact that Antoine and Strader were trying to build something that is all too rare in the private equity world: a company wholly owned and run by black investors. Seeing Antoine and Strader reminded him of his own days as a mutual fund pioneer.

“So many people supported me when I launched Ariel at 24, so many black business leaders in Chicago, the giants of years past,” Rogers says. “So when I saw a young entrepreneur genuinely committed to excellence and committed to performance, it was only natural to pay it forward.”

Antoine and Strader say their ownership of Midwest Motor Express, a century-old North Dakota company specializing in shipping small packages and freight to rural markets, is a perfect example of what they hope to establish as a Red Arts model. . They bought the company in 2019 from its founding family and over the next two years used it as a platform to roll out three more regional shippers, eventually building a network stretching from Chicago to Seattle and from there. Utah at the Canadian border.

After expanding MME and modernizing its operations by introducing new sales software and better analytics, they lined up the sale to Knight-Swift. Other Red Arts portfolio companies include Sunset Pacific Transportation, another LTL shipper, and Radius Logistics, which provides freight, warehousing and other supply chain services.

“We invest here in what the everyday consumer needs to live a happy life,” says Strader, 33. “Believe me, there would probably be anarchy if we were to go back to three-day expeditions.”

Both Antoine and Strader have entrepreneurship in their blood. Antoine’s father is an immigrant from Trinidad and Tobago who owned a Franco-Caribbean restaurant in New York. Strader’s father owned an auto service and repair shop in Augusta, Georgia. Strader is taking lessons from this body shop in private equity. For example: whenever he and Antoine visit the offices of a company, Strader makes sure to sneak in and check the cleanliness of the bathrooms.

“Every day I had to mop the floor in the mechanics’ toilet,” he recalls with a laugh. “It’s not the most fun experience. But it taught me a great sense not only of values, but also of the little things that matter in business – how you treat employees, how you treat customers.

Just as Rogers “pays it forward” by supporting Antoine and Strader, the young founders believe in the importance of fostering diversity as their business grows. Red Arts made seven new hires last year, bringing its total team to 11.

“He chose me,” says Antoine, referring to his mentor, Rogers. “He said, ‘I see this person’s ambition, I see this person’s hunger, I’m going to give them a chance. The only way to keep showing gratitude for it is to do it for others. We can hire people, we can train them, and hopefully they’ll go out and start their own things.