Even the best intentions in business can lead to terrible unexpected outcomes. As investors, it's our responsibility to look just beyond the financial potential and consider how things could go wrong.
Every Wednesday, our team holds a Pow-Wow/lunch meeting where we discuss podcasts, Netflix documentaries, books, articles, and more. A recurring theme that often takes center stage in our conversations is "Unintended Consequences in Business." This topic has gained traction after we watched and discussed Netflix documentaries like "Painkiller," "The Rise and Fall of Vape," and "The Social Dilemma." These shows prompted us to reflect on the severe unintended consequences of business decisions and the flawed justifications that we, as investors and entrepreneurs, use to claim we are doing "good". At Crescent Ridge, we recognize we are not immune from these flawed justifications and work diligently to put checks and balances in our processes so we don’t make the mistake of prioritizing short-term financial metrics over the greater good.
Recently, our investment committee decided against a deal I presented and was very enthusiastic about. This was a consumer health and wellness company that demonstrated exceptional financial performance and capital efficiency, and we had built a strong relationship with the founders, sharing similar values and goals. It represented the type of mission-driven opportunity we typically pursue, with both significant financial upside and positive social impact. However, the committee raised concerns that the company's growth could lead to an increase in single-use plastic usage, an issue we hadn't fully considered during our due diligence, likely blinded by their outstanding performance and other positive social impacts of the investment.
As investors, we have the power and responsibility to shape the future. By fixating solely on short-term financial gains, we risk pushing well-intentioned entrepreneurs towards decisions that could have disastrous unintended consequences. It's important for investors and entrepreneurs to avoid surrounding ourselves with yes-men and instead, value team members who consistently challenge our decisions. This approach ensures we don't compromise the greater good for financial success. I am particularly fortunate to work with Allison, who thinks very differently from me—I tend to focus more on financial aspects, while Allison is more futuristic and socially-conscious. She challenges my perspective and helps me see the other side of the coin. Over the years, we have learned to engage in very constructive disagreements.
Do you often think about Unintended Consequences in business? Would love to hear your thoughts!
Maria Gonzalez-Blanch
Fostering Relational Wealth: Lessons from Japan
In my recent family trip to Tokyo and Niseko, Japan, we were immersed in a culture deeply rooted in relational wealth. From the bustling streets of Tokyo to the snowy slopes of Niseko, every interaction was infused with mutual respect, gratitude, and a deep sense of service. As I reflect on these experiences, I have found some valuable lessons that resonate with the ethos of Crescent Ridge and our portfolio companies, many of whom already embrace many of these principles. Here are some of my key takeaways:
Mutual Respect and Gratitude: In both Tokyo and Niseko, serving others is not merely a transaction but an honor. There's a palpable sense of gratitude both from those providing a service and those receiving it. Whether it's a bow of acknowledgment when entering a shop, copious exchanges of heartfelt "Arigatos" before, during, and after a meal, or a genuine smile, each interaction is imbued with mutual appreciation and respect. What this means? Encourage a culture where serving others is seen as an honor. Emphasize the importance of expressing genuine gratitude and acknowledgment, fostering mutual appreciation and respect among team members and customers alike.
Money Isn't Everything: In Japanese culture, money isn't something to be coveted or pursued at all costs. Money is seen as a utility, with a focus on practicality and frugality. Japan prioritizes achieving financial stability and emphasizes financial literacy, saving money, and modest living. A minimalist lifestyle is admired, and excessive materialism is less common as personal wealth is subordinate to contributing to the welfare of the community. There's a recognition that true wealth lies in meaningful connections, experiences, and contributions to society. What this means?Financial stability – both personally and in business – is the first step to achieving 4DW. Once stable, your focus can shift to creating true wealth, which lies in meaningful connections and contributions to society. Prioritize creating value beyond monetary transactions, aligning your efforts with the greater good.
No Tipping Culture: The absence of a tipping culture in Japan speaks volumes about the high level of service expected and provided. Whether you’re at a 5 star hotel or in a local Onsen, everyone seems to go above and beyond without any monetary reward, driven instead by a desire to exceed expectations, treating every interaction with the honor of a lasting relationship. What this means?Highlight the significance of going above and beyond without the expectation of immediate reward. Try to exceed customer expectations in all interactions, providing exceptional service and fostering long-lasting relationships based on trust and goodwill.
Attentiveness to Others' Needs: Japanese hospitality extends to being deeply attentive to the needs of others, even in seemingly small details. We saw this in our hotel – the kids size robes, pajamas, slippers, toothbrushes, toys, etc. to priority seating for elders on the subways, there's a genuine desire to ensure everyone feels valued and cared for. What this means? Emphasize the importance of empathy and attentiveness in understanding and addressing customer needs. Encourage our companies to listen actively, anticipate preferences, and personalize interactions to enhance customer satisfaction.
This trip reinforced the importance of fostering a culture of mutual respect, gratitude, and service in all my interactions and to continue to encourage our portfolio company leaders to do the same. By prioritizing meaningful connections, exceeding expectations, and embracing a mindset that values people over profits, we can not only create financial success but also cultivate enduring relationships and contribute positively to the world around us. What a powerful reminder that true wealth is found not in the accumulation of riches but in the richness of our relationships and the depth of our connections with others. Arigato, Japan, for the invaluable lessons in cultivating relational wealth.
Allison
Our partnership with Praxis Accelerator
We are thrilled to celebrate our third year of partnership with Praxis, offering an optional investment opportunity to the business accelerator participants.
Over the past three years, we've invested in 26 ventures, drawn by the exceptional quality of the program and the remarkable success rate of its companies. These entrepreneurs are addressing critical issues, striving to make the world a better place while prioritizing profitability and sustainability. We're deeply appreciative of the Praxis community and eagerly anticipate continuing our fruitful partnership for many years to come.
If you want to learn more about Praxis, check out their programs here:
In the venture capital world, it feels like everyone’s chasing the next big unicorn. But the truth is, not every startup needs to be a billion-dollar giant to be a success. Actually, most exits happen in the $50M to $250M range. That’s where we, as small fund managers, come in and shine.
The Real Deal About Exits
Most successful exits land in that sweet $50M to $250M spot. It's a range often overlooked by the big VC funds. Why? Because for them, smaller checks don’t really move the needle. Their game is different — they're looking for those rare, massive unicorns. But here’s a secret: this overlooked space is where there’s a ton of value to be captured, and it’s ripe for the picking for small funds like ours.
Our Edge
Big funds aren’t geared to make the most of these opportunities — but that’s exactly where we excel. Our size is actually our superpower. It lets us be nimble, build strong relationships with the startups we back, and dive into opportunities that big funds might not even glance at. This isn’t just about being small; it’s about being smart, strategic, and selective.
Collaboration Over Competition
For this type of strategy, instead of competing with other VCs, we thrive on teamwork. Sharing cap tables with investors who get it, who see the value where we see it, is crucial. It’s not just about putting money in; it’s about pooling our resources, knowledge, and networks to fuel the growth of companies with real potential. This collaborative spirit is what sets us apart and has been a key driver of our success.
Our Track Record Speaks
Following this strategy, we’ve hit top quartile returns. That’s right — focusing on the “smaller” exits doesn’t mean settling for less. It means recognizing where the real, tangible opportunities lie and seizing them.
Let’s Get to Work
If you’re a fund manager nodding along as you read this, we should talk. There’s a vast field of opportunities out there that the big funds are just walking past. Together, we can tap into this potential and support the kind of growth and mission that not only is very profitable but that can make the world a better place.
Founder Highlight: Laura Munkholm
We're excited to continue our "Leadership Redefined" series by introducing you to an entrepreneur who is truly changing the game in the boutique fitness industry. Meet Laura, co-founder of Walla, a platform designed to simplify the lives of studio owners.
Laura is a multi-faceted individual who embodies inspiration in many ways. She's a fearless entrepreneur, a devoted mom, a supportive wife, and a dedicated yogi. She's also an adventurer, and a good friend who loves to dance. Laura's influence in community building extends beyond her immediate circles, especially as a key figure in the San Diego ecosystem. What truly sets her apart is her integrity. Laura leads her business with a laser focus on doing the right thing and carries an unparalleled passion for helping her customers succeed.
Laura's entrepreneurial journey began with a deep, firsthand understanding of the challenges and exhaustion that come with running a Yoga studio. She and her co-founder Doug, who had known each other for a long time working in the industry, decided to launch Walla in 2020 after many years of talking about the need for a better solution in the market. Doug is a serial entrepreneur with a brilliant vision for product and engineering, making them a dream team in the truest sense. Investing in Walla was an easy decision for us, not just because of our deep friendship and relationship with Laura and Doug, but also because of the exceptional product-market fit they had even before launching.
Q: What inspired you to start your company, and how has that initial spark evolved over time?
Laura: I co-founded Walla because I've been in the shoes of a studio owner. I know the exhaustion that comes even when you love your work. The tech in this space has been disappointing, making an already challenging job even harder.
Studio owners aren't in it for the money or glory; they love helping people feel good and empowered. So why does the tech have to be so difficult? That's why I said YES to co-founding Walla.
Additionally, 75% of boutique fitness studio owners are women, yet no one is representing their needs. I want to give these women a real shot at success and financial freedom. Until now, no one has been truly listening to them.
I'm continually inspired by our clients. Hearing how we've given them back time with their families or helped them focus on coaching a new client rather than tech issues moves me to tears. My team's dedication to quality and client success is also awe-inspiring. I love knowing that each day I get to work with such a passionate and dedicated group.
Q: What unique challenges have you faced, and how did you overcome them?
Laura: While it may not be unique, selling to busy owners/operators of small and medium-sized businesses is a constant focus for us. Despite their frustrations with current solutions, they're often too overwhelmed to consider a change. This has pushed us to be creative, improve our messaging, use client testimonials for social proof, and develop a "do it for you" approach to overcome inertia.
Q: What are some of your core values, and how have you incorporated them into the mission of your company?
Laura: Our core values are:
Raving Fans
Ownership Mentality
Change the Game
Big Hearted
We weave these into our day to day existence as a team. For example, when we are making product decisions, we aren't just looking at what makes us more money, we have a ranking system for client happiness, and that comes before new revenue generation. We want our clients shouting from the rooftops about us, and that won't happen if we don't listen to them first.
We also empower our team members to think creatively, and not to be scared to challenge us. We talk all the time about how we are all actually in an entrepreneurial role - and we are all responsible for the success of the company. It takes all of us innovating, focused on quality, and working together.
Q: What are the milestones you've achieved that you are most proud of since you started?
Laura: I am pretty sure I popped a bottle of champagne last summer when we hit 100 clients on Walla. It felt huge that we had successfully taken 100 businesses off another platform, successfully migrated their (sometimes decades of) data, and supported them in running their studios successfully. We are way beyond that now, but I don't think I'll ever forget that day.
I also loved being the main sponsor for our industry's biggest conference this year. It felt like we had gained the credibility to earn that spot, and had the whole conference talking about us. It was a huge accomplishment to be confident enough in our product, and what our clients would say about us, to stand on that stage and share it with the biggest names in the industry.
Q: Could you share some of your daily routines that keep you happy and healthy?
Laura: I need my family time for sure. I love having kitchen dance parties with my kids, and heading to the beach for a walk with my husband to keep my stress levels down. I also lean on daily movement (yoga and pilates), and hitting the dance floor at a periodic concert (July-Oct seem to be live music season in SoCal). I'm a live music junkie. It gives me a moment to let loose, dance, and forget about roadmaps, customer support tickets, and sales projections. I also love reading and have gotten into audiobooks lately, as it seems my only "reading" time is when I walk my dog in the morning.
Q: Can you highlight any initiatives your company is involved in, demonstrating your commitment to making a positive impact?
Laura: Our company has been dedicated to community outreach from the start. We encourage our employees to volunteer once per quarter and host company volunteer events multiple times a year at places like Feeding San Diego, Meals on Wheels, or even beach clean ups with the Surfrider foundation. Not only is it a fantastic way to bring us all together, but it serves as a nice reminder to act with gratitude and service in our daily interactions with clients and vendors. We recently invested in a mindset coaching program for our employees as well, to help us all learn how to move through interactions with a regulated nervous system and with a renewed reminder of purpose. The combination has not only helped with team morale, but we also hear from our clients all the time about how passionate and authentic our team members are. It feels like a win-win situation all around!
Q: What do you like about working with Crescent Ridge?
Laura: I love that I'm not intimidated to talk to the Crescent Ridge team. They make me feel like I'm not crazy for having hard days, or dealing with the day-to-day challenges. They are also so smart. That might be obvious, but I always know they will have an innovative idea, or insight that I would never have come up with on my own. They've built such a team of experts, who genuinely care. I know they support us in making decisions that are the "right" call and not only focused on the bottom line as the only important factor. It feels nice to have a partner, and not just an investor.
Founder Highlight: Kate Dilligan
As we launch our new monthly series called "Leadership Redefined", our first spotlight couldn't be more timely or meaningful. This series is a cornerstone of our commitment to redefine new patterns of leadership by showcasing the unique and authentic leaders we are privileged to work with. Kicking off during Breast Cancer Awareness Month, we are thrilled to introduce you to Kate, a true force of nature and the visionary founder behind Cooler Heads.
Kate's journey began with her own personal battle against breast cancer, an experience that not only profoundly shaped her but also inspired the creation of her groundbreaking med-tech company. From our first meeting, when Cooler Heads was merely an idea in a PowerPoint presentation, we knew Kate was someone extraordinary. Her relentless drive and grit aren't just admirable traits; they're qualities we've witnessed in action, especially as she's navigated numerous roadblocks.
Kate also possesses a keen business acumen and an exceptional ability to adapt to new challenges. Her growth mindset has been instrumental in taking Cooler Heads from a concept to FDA clearance and commercialization. Remarkably, the company is on track to achieve 7-digit revenue less than a year after its commercial launch. It's this unique blend of resilience, business savvy, and adaptability that makes Kate such an exceptional leader.
We're incredibly proud to work closely with her and are eager to share some of the wisdom she's accumulated along her unique journey, particularly as we honor and recognize Breast Cancer Awareness Month.
Kate Dilligan, Founder of Cooler Heads
Q: What inspired you to start your company, and how has that initial spark evolved over time?
Kate: Cooler Heads was born out of my experience as a cancer patient. I was diagnosed with Stage 2B breast cancer in October of 2016. I had no family history of breast cancer, and the diagnosis completely took me by surprise. I realized as a patient that your medical team is set up to give you outstanding care to treat the disease, but when it comes to side effect management, you're on your own. Cooler Heads is using technology to build evidence-based products, content, and services that cancer patients and survivors need to manage the complex and daunting side effects of treatment.
Q: What unique challenges have you faced, and how did you overcome them?
Kate: Having never been a founder before, it's hard to gauge whether the really tough challenges are unique to me or the company. As a solo female founder of a med-tech company who is not an engineer and didn't come from the medical tech industry, I faced skepticism early on. I've dealt with this by working hard to surround myself with subject matter experts. I don't have to have the answers, but I have the skills to go and find them, vet them, and implement them.
Q: What are some of your core values, and how have you incorporated them into the mission of your company?
Kate: Honesty is a core value I have. We've built great trust with our team, customers, investors, and end-users. When you're building products for cancer patients, being honest about what to expect is key. This honesty has been central to our success and has created a virtuous cycle of trust and credibility.
Q: What are the milestones you've achieved that you are most proud of since you started?
Kate: One of the biggest milestones for me was the day we were cleared by the FDA. Another was when our first patient went to see her medical oncologist before her final chemotherapy infusion and he was blown away that "she didn't look like a cueball." The last one I will mention here is when we won a $2M+ grant from The National Cancer Institute.
Q: Could you share some of your daily routines that keep you happy and healthy?
Kate: I'm a big fan of working out first thing in the morning. I have reprogrammed myself to go to bed and get up early. Having a workout in and a long walk with my dogs before 7 am really helps me stay grounded and attack the day.
Q: Can you highlight any initiatives your company is involved in, demonstrating your commitment to making a positive impact?
Kate: We're focused on increasing access to our technology. We work with non-profits who help offset the costs of scalp cooling for those whose insurance won't cover it and are unable to pay out of pocket. Additionally, we provide our accounts with free caps for indigent patients. We are also working hard to expand beyond Medicare coverage for scalp cooling so fewer patients face significant financial barriers to accessing this treatment. We believe all patients should have a choice as they go through chemo.
Q: What do you like about working with Crescent Ridge?
Kate: I like that I get partners in building the company who roll up their sleeves and get to work with me. It truly is more than a check - it is access to a broader network and a relationship with the principals in the firm. Startups are team sports, and I am lucky to have Allison and Maria suiting up for Cooler Heads.
Q: Is there any advice, final thoughts, or encouragement you'd like to offer to fellow founders within the Crescent Ridge community?
Kate: I would recommend that founders nurture their relationships with all their investors. Keep the lines of communication open and don't be afraid to ask for help.
The World Needs more “Gray Leaders”: Why We Back Them in Business and Beyond
In our years as venture capital investors, we have come to appreciate that the leaders making the most meaningful impact are those who embrace nuance and complexity—Gray Leaders, as we call them. These leaders aren't in the business of taking extreme black/white positions, grabbing headlines or jumping on trending topics; they're motivated by curiosity, empathy, and a genuine desire to make a difference. This focus on substance over sensationalism is crucial, not just in business but also in the broader spheres of politics and public service.
What sets these Gray Leaders apart is their dedication to true diversity of thought. They foster relationships across a broad spectrum of socio-economic and cultural backgrounds. This isn't about ticking boxes or surface-level inclusion; it's about embracing different ways of thinking and a range of lived experiences. It’s a trait that not only enriches their own perspectives but also makes them more effective leaders in any setting.
Interestingly, we believe that most people actually fall within this gray area; they're neither hard-core right nor left, black or white. Unfortunately, it's often those at the extremes who make the most noise, creating a narrative of a deeply polarized world. But we're optimistic. We think it's time for the Gray majority to raise their voices, to highlight the nuances and consider perspectives from both sides of the aisle.
Empathy and a willingness to confront complexity are the hallmarks of Gray Leaders. They seek compromise and look for what unites us rather than what divides us. This approach promotes more authentic dialogues and builds stronger, more resilient companies and communities. Through our investment experiences, we’ve observed that businesses led by Gray Leaders are exceptionally well-equipped to navigate the complex challenges of today’s world.
As we look toward the future, we are both convinced that these are the leaders we need to guide us toward a more balanced, unified world. These are the leaders we want to back as investors!
Maria and Allison
The World Needs more “Gray Leaders”: Why We Back Them in Business and Beyond
Where Do You Get Your Validation From? A Reflection for Every Entrepreneur
Have you recently paused to ask, "Why am I doing this?" As investors at Crescent Ridge, this isn't just a casual question; it's central to our philosophy. We spend a considerable amount of time exploring the motivations behind the entrepreneurs we consider for investment. This part of the diligence is crucial, as it directly correlates with a company’s chances for success, resilience amid challenges, and the ability to foster a strong organizational culture.
Consider two extremes: One entrepreneur might be all about status, fame, and money, willing to bulldoze through anything to achieve these goals. On the other end, picture a yogi who values inner peace, personal alignment and is unattached to the capitalist society's definition of success. At Crescent Ridge, we appreciate entrepreneurs who are in the middle of the spectrum but lean a bit more towards the yogi side. They possess a strong sense of purpose, an inner compass, and also seek the right kind of external validation—all without losing sight of profitability.
What’s the Right Type of External Validation in Our View?
Getting featured in TechCrunch or Forbes for a funding round with a very high valuation but limited "real enterprise value"— is the type of "hype" that in our view, is the "wrong" type of external validation that entrepreneurs should strive for. On the other hand, the right type of external validation might look like the pride you feel when a customer sends a heartfelt thank-you note for solving their problem or when your company finally hits profitable growth. The magic formula for success lies in recognizing which external affirmations are worthwhile and blending them with a strong sense of self-worth.
The Importance of Discerning the Right Type of Validation for Underrepresented Founders
We often work with entrepreneurs who, due to very deep, complex societal issues and biases, face greater challenges when seeking venture capital. For these founders, the need to discern the right type of validation is particularly important. We remind them that, as the saying goes, "Don't sell sand in the desert." If traditional VCs are not recognizing your value, focus instead on indicators of success that come directly from your business—like rising sales or satisfied customers. While it's disheartening that less than 2% of VC funding goes to women, it's worth asking: Why seek validation from a group that historically undervalues you? Better to play a game you can win and if you raise capital, get it from your customers or from investors who value you.
Building Internal Validation
If you believe you could use a bit more internal validation, here are some ways to build it:
Find an Accountability Partner: Seek someone who challenges your perspective rather than merely validating it. Life is nuanced, and appreciating different viewpoints is necessary to succeed. Many entrepreneurs, especially the very narcissistic ones and with a fixed mindset, fail at this.
Acknowledge Your Progress: Pause and celebrate the milestones in your journey. Self-recognition is the cornerstone of a robust internal validation system.
Define Your Values: Know what you stand for. Your values will guide you when you encounter challenging decisions, giving you greater confidence.
Be Honest About Trade-offs: Understand the sacrifices needed to achieve your goals. Authenticity is a key element of internal validation.
Take Responsibility: Accept the life circumstances you can't change and focus on what you can.
Embrace Discomfort: Challenges foster growth. Don’t shy away from stepping outside your comfort zone.
Invest in Self-Reflection: Regular introspection provides valuable insights into your motivations and areas where you can improve.
Closing Thought
Striking the right balance between internal and external validation is a key factor in how we identify promising entrepreneurs at Crescent Ridge. While external affirmations have their place, they should never overshadow your own sense of self-worth. Remember to periodically ask yourself, "Where am I seeking validation and who am I seeking it from?" Your response to this question can be a revealing compass, guiding you on your path to entrepreneurial success.
Allison and Maria
Where do you get your validation from?
Our Philosophy and Core Values
We believe that flourishing business partnerships - particularly between founders and funders - start with alignment on philosophy and values. If you see business partnerships the same way, you getting to know us is just as important as us getting to know you. Reading this is the first step in understanding who we are, what we stand for, and whether our business philosophy and core beliefs align with yours.
Why We Do What We Do
At Crescent Ridge, our driving force is an unwavering love for entrepreneurship and a relentless quest to see change-making, innovative leaders succeed. In our next five years, we strive to achieve an 80% success rate for our portfolio companies (by success, we mean that 80% of our companies will be growing profitably) and cultivate what we call "4D Wealth” (making money, deepening relationships, helping society, cultivating creativity).
We believe in supporting founders to achieve personal and professional financial security while improving the world. As stewards of capital, we embrace our responsibility to serve others and the global community, leveraging the resources entrusted to us for positive change.
How We See the Founder - Funder Relationship
At Crescent Ridge, we believe in fostering a more equal power dynamic between funders and founders during the early stages of a partnership. We strive for a mutual vetting process, wherein both parties recognize the unique value they bring to the table.
We aim to transcend the current commoditized and transactional funding approach by emphasizing mutual power and responsibility in our partnership. Our vision is to build a relationship founded on transparency, trust, and shared value creation.
Core Values That Guide Us
Our investment philosophy is rooted in these core values that define how we approach every opportunity:
Capital made over capital raised
Value creation over valuation
Sustainability over speed
Traits We Possess and Seek in Founders
We believe that greatness often lies in hidden potential. We seek out and appreciate underestimated entrepreneurs who embody traits not prioritized in Silicon Valley, such as resourcefulness, creativity, adaptability, realism, pragmatism, and financial discipline.
Our Unique Advantages
At Crescent Ridge, we set ourselves apart through our unique evergreen fund structure. With no outside limited partners (LPs) influencing our investment decisions, we remain agile and committed to the best interests of our portfolio companies. Our modest fund size allows us to focus on startups with the potential for $100 million exits, ensuring we make a meaningful impact. We operate with flexibility, free from forced timeframes, making strategic decisions that align with our founders' growth journeys.
Our Pet Peeves
We're not fans of wasteful practices, such as dismissing 9 out of 10 companies in our portfolio, raising excessive capital too early, which often leads to squandering valuable resources before you even know what problem you are solving for. We prefer founders who focus on solving real problems rather than founders who are creating “fabricated needs.” We don’t encourage a “frantic pace” in the early stages; we prefer intentional growth, genuine quality over “hype,” and admire founders who embrace realistic expectations and set achievable goals.
Our Strategy and Why It Works
The Opportunity:
While most VC funds chase unicorns and invest in founders that fit a certain pattern, they overlook many founders building profitable, scalable businesses in the $50-100 million range. The median exit of VC-backed companies has historically hovered around $50M, and we’ve observed in our portfolio that the best returns for both the founders and the investors happened when founders raised less than $5M in total and grew to $50-100M in 4-7 years. The outcome of this strategy has brought better odds for everyone; founders generate multi-generational wealth, and early stage investors have a healthy, more liquid portfolio with a high proportion of 5-10x outcomes.
Who we fund:
Our strategy centers around building strong relationships with entrepreneurs who possess the traits that are discussed above. We like to take time to build the relationship with founders before we fund, to make sure we are the best partners for them and ensure that we embark on a healthy partnership.
How we fund:
We don’t like to rush. We like to take enough time to understand founders’ identities, passions, values, strengths, and long-term goals. We minimize waste, collaborate with skilled experts, solve deep problems, and foster methodical business growth. We know when it’s time to accelerate and when to take a more measured approach to achieve realistic exits. We have the ability to fund entrepreneurs from the beginning to their exit. Our process before funding takes around 3 months and includes some discovery sessions to have meaningful conversations for mutual vetting.
Why Crescent Ridge?
With a decade of experience, ten successful exits, and our fund consistently ranking in the industry's top quartile; Crescent Ridge has a track record of identifying exceptional founders and empowering them to thrive in their unique way. We believe that the foundation of any great business starts with self-awareness and identity discovery. We nurture founders' strengths, complement them with experienced operators in our network, and offer guidance throughout their entrepreneurial journeys from the beginning to the exit.
We are looking to fund visionary entrepreneurs who desire to embark on a transformative journey with us, as we collectively strive to build prosperous and sustainable businesses that shape a better future for all. Let's create a shared vision and make a difference together!
Allison and Maria
Allison Long Pettine and Maria Gonzalez-Blanch
Three Crucial Questions Before Raising Capital: A Founder’s Guide
As an early-stage fund, we frequently get asked "What should I consider before raising money?" Here are three essential questions we encourage founders to think about before embarking on the fundraising journey.
Do you genuinely need the money?
While it may sound rhetorical, this question goes beyond the obvious need for funds in startup growth. Consider whether money alone will truly solve your problems. Often, startups seek funding to develop more features for their product before finding paying customers. However, you need to validate your product's market fit and identify your target audience first. Before raising funds, ask yourself if the money will go towards building an MVP that has already been validated in the market, addressing a genuine need that customers TRULY need and are willing to pay for. The same way that you need to put the horse before the cart, you need to have a product that your customers want before you raise money.
Who is your true customer?
Your customer is whoever gives you money. If you raise capital, your investor becomes a customer in a sense, paying you money for equity in your business. The needs of investors and end-users may differ. Investors seek returns on their investment, while your customers have specific needs you aim to fulfill. Understand that venture investors often diversify their bets across a portfolio, looking for a few standout companies to deliver substantial returns. This misalignment might arise when you take on traditional VC money too early, potentially causing conflicts between investor interests and the needs of your real customer.
What do you gain and give up by taking on capital?
Founders often view capital as an all-upside proposition without fully considering the downsides. While funds are crucial for growth and scaling, raising capital comes with risks. As mentioned earlier, it can lead to misalignment with your customer's needs and may pressure you to prioritize milestones over understanding market dynamics and developing a thoughtful strategy. One significant sacrifice of accepting outside funding, particularly from venture funds, is that "it sets a clock ticking". Instead of having time to deeply listen to your customers and strategize, you may feel compelled to rush towards hitting milestones to secure the next round of funding. Moreover, taking on capital means you will have to answer to investors, potentially compromising your autonomy and flexibility.
By honestly addressing these three questions, you can make well-informed decisions regarding fundraising and chart a more sustainable and aligned path for your startup's success. We like to discuss all these three questions with entrepreneurs and friends who ask for advice. What other questions do you think are important?
