We asked three firms that invest in growth companies (one private equity outfit, two venture capital firms) to look over this year's Inc. 500 and tell us which companies caught their eye. We should note that we didn't provide these investors with anything approaching a formal business plan; they only had the material published in our September Inc. 500 issue to go on. Still, our investors (good sports all) were able to identify a number of companies they found promising. Here are their picks.

Michael Raphael

M Space Holdings (No. 8)
2006 revenue: $31.3 million
Location: New York City
What it does: Makes, leases, and finances modular buildings

"Prefab technology has been around a long time, but we think there's new momentum around it. It's an efficient and green way of building, the price generally is lower, and it lets builders stick to a time schedule. All in all it takes a lot of the risk out of the transaction for the buyer."

Midwest Electric (No. 356)
2006 revenue: $28 million
Location: Groveport, Ohio
What it does: Maintains electrical grids

"When it comes to managing grids or bridges and roads, people are seeing that you've got to work with the best. Midwest appears to have good, strong relationships. I also like the fact that these guys are from the Midwest. Midwesterners tend to be great people and have strong business values."

Massage Envy (No. 82)
2006 revenue: $14.3 million
Location: Scottsdale, Arizona
What it does: Sells massage franchises

"There are more licensed massage therapists every day, but there isn't a national massage brand. There are some liability risks associated with a business based on touching people, of course. But I like that the company was started in a booming region. Much of its early momentum is going to be in the western U.S."

Michael Raphael
Vice president of private equity
CMS Cos.
Wynnewood, Pennsylvania

Carl Stjernfeldt

Bill Me Later (No. 6)
2006 revenue: $53.6 million
Location: Timonium, Maryland
What it does: Operates an online payment system that lets consumers obtain instant credit

"It's a real fear factor: Many people don't want to use their credit card numbers online. Bill Me Later will take care of the payment for you and consolidate all of your online bills. By adding a hidden layer to the buying process and enabling one-click buying, Bill Me Later reduces the risk that consumers will drop out midway through the process if their phone rings or because their kids are bothering them. It's a very smart idea."

Enjoy Life Foods (No. 361)
2006 revenue: $4.2 million
Location: Schiller Park, Illinois
What it does: Sells foods for people with allergies

"Would I, as a parent, pay an extra five bucks to make sure food is safe for my kids if they had allergies? In a heartbeat. I have a hard time seeing how this company will not succeed."

Vocera (No. 462)
2006 revenue: $24.1 million
Location: Cupertino, California
What it does: Operates a voice over Wi-Fi system that lets co-workers at, for example, hospitals communicate via wearable badges

"Voice over Wi-Fi is just a huge wave that's coming. Ten years from now, you will never use your cell phone in an office building. The cell phone as we know it is going to disappear. Vocera has taken aim at one smaller vertical in this new segment--hospitals where doctors are using small communication devices that are powered by Wi-Fi. They were smart enough to start small, to realize that converting the world takes a little time."

Carl Stjernfeldt
Castile Ventures
Waltham, Massachusetts

Craig Jones

TMG Health (No. 307)
2006 revenue: $73.5 million
Location: King of Prussia, Pennsylvania
What it does: Manages Medicare and Medicaid claims for insurers

"There aren't many industries where the target market in terms of revenue is in the hundreds of billions. But as baby boomers grow older, Medicare and Medicaid patients are going to make up an enormous segment of the health care market."

Iconoculture (No. 170)
2006 revenue: $12.1 million
Location: Minneapolis
What it does: Researches consumer trends

"Iconoculture has some expertise working with Latinos and African Americans, especially young men. This is a great service because companies don't typically get enough market research panels representing these groups. And the fragmentation of the consumer marketplace has companies scratching their heads, trying to figure out different demographic groups."

Trio Clinical Research (No. 164)
2006 revenue: $12.6 million
Location: Durham, North Carolina
What it does: Manages clinical trial staffing

"The monitors who run clinical trials tend to be nurses, and there's already a nursing shortage, so companies are having a real hard time finding good people to ensure the integrity of their trials. Trio provides qualified clinical monitors at a good price. Any company that can consistently do that--quicker and with reliability--has a great business."

Craig Jones
Managing partner
Ticonderoga Capital
Menlo Park, California

Published on: Oct 1, 2007