The key to a successful investor-founder partnership
Happy New Year! In 2023, Allison and I will write a monthly article featuring one of twelve key takeaways from our learnings we’ve had in the last 10 years. Starting from the top, our January takeaway is:
The key to a successful investor-entrepreneur partnership is to articulate our definition of success and find founders who align with it.
When it comes to successful partnerships, defining success and finding founders who align with that definition is key. Just as shared priorities, mutual expectations, and open communication are important in a marriage, we’ve also seen how critical they are in our investor-founder relationships. Candid conversations about values and goals early on can be uncomfortable and unnatural, but we have found they increase the chances of a strong relationship in the long term.
Before we can identify founders who are aligned, we need to articulate what success means to us as an investor. We’ve spent a lot of time reflecting on this at Crescent Ridge. Unlike the typical venture capital model where only 1 in 10 startups hit it big, our goal is for 9 in 10 startups to become sustainable, profitable, growing businesses. We want the majority of the founders in our portfolio to achieve their definition of success. Too often, the majority of founders in a portfolio are casualties along the way to get that one unicorn.
In addition, success is supporting these sustainable, profitable, and growing companies in their quest to create 4D Wealth (“4DW”). An expansive definition of wealth, 4DW is a term we’ve used internally for several years, and are starting to be more vocal about. By being upfront about our desire to create financial, relational, social, and intellectual wealth, it’s easier to identify the founders who share this goal, most of whom are already creating 4DW, despite not being familiar with the specific term. Starting with this common approach and shared definition of success leads to our strongest partnerships.
Some good examples of these partnerships include our investments in Walla, Needed PBC, and Kegg Technologies. For example, Laura Munkholm, a co-founder of Walla, has built an incredibly tight community of fitness studio owners before the company even officially incorporated. Because of this, Laura and her co-founder Doug Hecht fully understand the challenges studio owners face and are solving their deepest business pain points with the innovative technology of their software. In addition, they go above and beyond to serve the community and build deep relationships with their customers.
Needed PBC is another great example, founded by two remarkable women who are on a mission to improve pregnancy outcomes and children's health with their line of supplements, while preserving the environment and strengthening the community of natural practitioners. Similar to Laura, Ryan Woodbury & Julie Sawaya spent years establishing trust with their communities while developing an optimal prenatal formula.
At Kegg (Lady Technologies), Kristina Cajahova has developed a device that helps women understand the science behind their hormones in order to deliver a higher quality of healthcare to women based on their own bodies and cycles. Kristina’s initial use case is to provide affordable access to reproductive care and has thousands of inspiring customer stories to share while delivering consistent financial results.
These are just a few examples of companies in our portfolio led by 4DW founders. Founders who want to create successful businesses and also want to have a positive impact, build meaningful relationships, and innovate in their fields.
Before we invest, we spend a lot of time with all our founders having meaningful conversations around what success looks like. Throughout the years we’ve seen a clear trend:
The investments that have produced the best results are the ones in which we took the time upfront to really get to know the founders and understand what success means to them and discuss how to align our values and goals.
Allison and Maria
