The Private Equity Podcast, by Raw Selection

Micro Cap Investing Pitfalls & Opportunities with Ben Claremon

Apr 8, 2025

Ben Claremon, a Partner at Devonshire Partners specializing in micro and nano-cap investments, shares his journey from hedge funds to private equity. He highlights the overlooked potential of small public companies and argues that they often offer better governance than their private counterparts. Claremon discusses the crowded lower middle market, the importance of building long-term relationships, and effective risk mitigation strategies in microcap investing. His insights push investors to reconsider opportunities in this segment.

Ask episode

Chapters

Transcript

Episode notes

Intro

00:00 • 3min

Opportunity in Microcap Investing

02:38 • 7min

Navigating the Challenges of Micro-Cap Investing

09:55 • 5min

Navigating Micro-Cap Investment Risks

15:05 • 7min

From Hedge Funds to Private Equity

21:53 • 10min

Description:
In this episode of The Private Equity Podcast, Alex Rawlings sits down with Ben Claremon, Partner at Devonshire Partners, a lower middle-market PE firm investing in micro and nano-cap businesses. Ben shares insights into why PE firms overlook small public companies, how microcap investing presents unique opportunities, and why a hedge fund mindset can be valuable in private equity. He also discusses the challenges of deal competition in the lower middle market, mitigating risks in microcap investments, and how Devonshire builds long-term relationships with business owners.

Breakdown:

[00:00] Welcome back to The Private Equity Podcast. Today, Alex speaks with Ben Claremon, Partner at Devonshire Partners, focusing on micro and nano-cap investments.

[00:30] Ben’s journey from real estate and hedge funds to private equity.

[01:00] Devonshire’s investment focus: $2M–$10M EBITDA, founder/family-led businesses.

[01:27] The crowded lower middle market and increased deal competition.

[02:25] Why PE firms ignore small public companies and why they shouldn’t.

[03:48] The lack of institutional capital in microcap public equities—an overlooked opportunity.

[05:16] Public vs. private small businesses—why public companies often have better governance.

[07:07] Devonshire’s hybrid approach: investing in public companies with a private equity mindset.

[09:00] How Devonshire builds relationships with microcap companies for long-term deals.

[10:28] Risks and challenges in microcap investing—and how Devonshire mitigates them.

[12:19] Why small public take-private deals are underexplored by PE.

[14:16] Devonshire’s screening process to filter out high-risk investments.

[16:10] Generalist vs. Specialist Investing—how Devonshire balances both.

[19:31] Lessons Ben brought from hedge funds into private equity.

[21:57] Ben’s podcast recommendations: Capital Allocators, Invest Like the Best, and his own Compounders Podcast.

[30:04] Connect with Ben:
🔹 Twitter: @benclaremon
🔹 Compounders Podcast on Spotify & iTunes
🔹 LinkedIn: Ben Claremon

[31:03] Closing remarks and thank you for tuning in!

Thanks for tuning in!

Subscribe for more episodes on iTunes & Spotify

Got feedback or questions? Email Alex at alex.rawlings@raw-selection.com. Until next time—keep smashing it!