Let me start with my conclusion: Entrepreneurs and founders looking to raise growth equity shouldn’t hesitate for a minute to engage with associates.

Now let me explain why I believe this to be true:

• The interest level of a growth equity deal is not measured by its deal source.  Great companies and contacts come from many sources and we respect and encourage all of them.  Clearly some mediums are more effective than others (e.g. bankers who understand our investment focus versus mass emails) but who within our firm actually spoke to the company first never enters into the equation.

• Every investment professional within our firm is responsible for interacting with founders and entrepreneurs.  The entire team meets on Mondays to discuss interesting companies/ people we interacted with that fit our investment focus.  The discussion revolves around the company’s value proposition, brainstorming around how Volition can best add value and what actionable next steps are appropriate.  “Non-partners” are involved in these discussions as much as partners. In fact, in many cases, it is thanks to the efforts and insights from the “non-partners” that these companies become known.

• Associates are very aware of – and have a great appreciation for – what deal team would be the best to explore a potential partnership.  Because they interact with the partners on a daily basis, they appreciate particular areas of passion and can provide invaluable advice on how best to present to the partner.  As they taught me in consulting, “knowing your audience” is a key ingredient of a successful presentation.  Associates “know the audience” cold.

• Associates have a network of contacts at other firms.  And they are social.  It is not uncommon for the following conversation to occur:

Associate at Firm A:  “So what areas are you looking at these days?”

Associate at Firm B:  “I’ve been spending a lot of time looking at data services businesses.”

Associate at Firm A:  “Cool – that’s a great space.  You should check out Company X.   It doesn’t fit in our investment profile, but it’s a great company.”

My opinion is clearly colored by the way we are structured at Volition.  We are a small, cohesive and collaborative team aligned around the common goal of identifying and partnering with great founders to build market leaders.  As such, before entrepreneurs categorically dismiss interacting with associates, I would encourage them to dig a little deeper on the culture and structure of the firm.

Geraldine

Below is a list of 5 reasons why we choose to partner with founders:

Commitment.  We believe there is a commitment and passion that is unique to founders.  Founders were there when the light bulb went off .  They took the leap to start the company from nothing more than an idea. They breathed life and capital into the company by any means possible.  Founders are the ones who will put the company on their back if necessary and carry it forward.  The commitment of the founder to success of their business is unparalleled.

Resourcefulness.  Founder ownership implies that minimal outside capital has been raised to date.  In order to achieve Volition’s minimum revenue target of $5 million without raising outside capital, the company must have a business model that works and a management team that knows how to efficiently invest money in order to generate a return.  These characteristics provide us with a high level of confidence in management and a belief that additional capital will be spent wisely and lead the company to even greater heights.

Meaningful Ownership.  We believe that management teams, not investors, are responsible for building great companies and driving shareholder value.  As such, we like to invest in businesses where founders retain a meaningful ownership stake in the business post-investment.  We are more than comfortable providing founders with liquidity as part of a transaction but in all cases we like management to retain meaningful ownership.  We want management to be properly motivated and ultimately rewarded for all their hard work and dedication and believe the best way to accomplish this is through meaningful equity ownership.

Alignment.  Companies that raise large sums of capital from multiple investors over multiple rounds of financing sometimes result in conflicting interests among shareholders.  This dynamic can create scenarios where certain outcomes are good for some shareholders but not all shareholders.  We like the dynamic in founder-owned businesses where simple ownership structures leads to 100% alignment among all shareholders to maximize value.

Opportunity to Add Value.  Founder-owned businesses that achieve $5 million in revenue without the aid of outside capital have displayed the ability to achieve a lot with very little.  These companies have achieved results without large sums of capital and in many cases without a formal board of directors.  We believe these businesses can benefit greatly from our network and our expertise in building strong boards, entering new geographies, evaluating strategies, and preparing for IPO or merger.  We focus on more than just investing and believe we can provide great value to our portfolio companies.  We call this “Capital +”.

Sean

It seems only appropriate that for this inaugural post, we answer the question of why we chose the name Volition Capital. After sorting through hundreds of names, we chose the word “volition” because it represents to us one of the key ingredients for success we find in the founders and entrepreneurs we work with.

Volition literally means to make a decision of one’s own will. In any entrepreneurial endeavor, we believe volition is expressed as a certain tenacity, persistence, and never give up attitude. This entrepreneurial volition also connotes a sense of striving in the face of adversity and an unwavering will to win. It’s this volition that we admire most in the people we work with – so we chose this name in honor of the management teams of our portfolio companies who bring life to this word every day through their commitment and dedication to success.

The decision to go with “Capital” was a much easier decision. Despite coming from a heritage of being called “Ventures”, this team has increasingly focused on growth equity investments for many years. As Volition Capital, we expect to continue that trend and principally focus on growth equity investments in high potential, founder-owned technology businesses. Given our investment focus, Capital was the obvious and more accurate choice.

So there you have it – Volition Capital.

Roger