After three Wall Street bankers started their own private-equity firm back in 2011, they broke P.E. protocol by courting restaurants and consumer brands that were cultishly adored yet so small that big firms would strut right past. One of those small-fries was Shake Shack, the hot dog stand turned red-hot publicly traded company.

Fast forward four years, and Alliance Consumer Growth, with an approximately 6 percent share, is now the fourth-largest shareholder of Shake Shack (NYSE: SHAK), which has 74 global locations (40 are owned, the rest licensed) and a market capitalization of $1.8 billion. For that, and other quiet successes, Fortune just named its cofounders Trevor Nelson, 37, Julian Steinberg, 36, and Josh Goldin, 38 to its annual 40 Under 40 list. It was a happy surprise for a firm that has bet on players most of their rivals did not know existed.

“The opportunity we saw was to stay small and go early and really have a philosophy around growth and identifying the true rising stars in the second or third inning of the growth,” Goldin said in an interview with the New York Business Journal after the list came out. “We’re scrappy, we’re tiny, we’re only six people. We’re deliberately very small, very entrepreneurial and very entrepreneur-friendly."

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They’re friendly to entrepreneurs because they count themselves among them. When the company started five years ago, they saw a “white space” in the finance market with all the money going to larger restaurant operations and no one paying attention to young and fast-growing restaurant brands, or small but unique companies in the consumer product space.

“If you need $100 million in capital and you’re a private company, you’d have an easier time than if you needed $10 million or $15 million,” Goldin says. ACG, which has headquarters in midtown East, has $90 million in capital to work with, raised strictly from families and individuals with ties to the consumer product industry. The firm typically invest between $5 million and $25 million a pop in companies that fall into a few subcategories: restaurants, snacks, foods, and beauty.

Among their coups: an early investment in Krave Jerky, which was acquired by Hershey in January, and Plum Organics, which got picked up by Campbell Soup Co. two years ago.

But they’ve also been very intrigued by the fast-casual, limited-service restaurant space where customers order at the counter. They connected with Shake Shack when it had perhaps seven units, and made the investment about 18 months before it went public, when it had just 17 locations. At the time, restaurateurs Danny Meyer and Shake Shack CEO Randy Garutti were self-funding it and not necessarily looking for investors, but they built a relationship and developed trust and decided to grow the business together.

In July, Meyer’s Union Hospitality Group and ACG partnered again to take a minority stake in fine-casual restaurant chain Tender Greens, which has 22 locations and is based in Culver City, Calif. The concept is farm-to-fork, and it’s the type of idea that Meyers told the New York Times that he wished he’d thought of himself. Goldin is hoping they will be able to someday expand to New York City.

Although they’re based in Manhattan, the firm invests across the United States, and the partners travel to see 500 to 1,000 restaurants firsthand annually, and tasting the food — which must be “amazingly delicious” — is only part of their checklist, Goldin said.

“It’s great that they have a line out the door in one location. What happens when they have five or seven or 10 locations? What we look for is lines out the door in every location,” Goldin said. “We look for a concept, where they look at offering something differentiated, something better.”

They don't necessarily get to see financials, but if they did they would look for a brand like Shake Shack that has high average unit volume, another plus.

Goldin and his two cofounders took traditional paths into investment banking starting their careers at big banks that ultimately fell to the financial crisis. Goldin and Nelson met on the first day of analyst training at Lehman Brothers. Steinberg had been at Bear Stearns. They went on to work at other smaller firms, but they’ve specialized in consumer products, including food, and they’ve got a bias toward organic, healthy fare.

Another brand they’ve invested in is PDQ ("People Dedicated to Quality"), a fast casual restaurant company developed by Outback Steakhouse co-founder Bob Basham, and MVP Holdings CEO Nick Reader. It specializes in fresh, hand-battered chicken tenders, made-to-order chicken and turkey sandwiches, fresh-cut fries, hand-spun milkshakes and fresh salads. When they invested last year, the company had less than 20 restaurants, and it now has 45, a growth rate similar to Shake Shack.

What ACG does for companies like this, with seasoned restaurant operators, is bring in experience in other arenas and help them deal with real estate issues, marketing and social media, or expertise in establishing a line of credit with the bank.

“When you go from one or two to 50, it’s much more dependent on having systems and structure. Shake Shack has learned to scale. They didn’t start out with that DNA, but they learned it,” Goldin said.

As for when ACG will divest itself of Shake Shack, the answer is not yet. “The lion’s share of our stake is still invested, and we’re very excited about the product and the continued growth,” Goldin said.

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