The value of our partnership comes from the decades of combined experience our team has in building enterprise software companies. This experience spans industry sectors, funding strategies, organizational strategies and more. With Guide Services, we bring 5x the value in ½ the time.
This isn’t because we are geniuses. Far from it. In fact, it is our mistakes and missteps that make up our value add. These mistakes are common, and the themes emerge from experience on several deals across many years.
Valuing a Partnership
So, what is the value of our partnership to you? Well, that depends on how much a mistake could cost you.
Some of our mistakes have cost us tens of millions of dollars upfront. Some are more surreptitious; they feign ‘cheap lesson’ only to rear their ugly head moments before exit and turn out to cost millions as well. All of them are painful, from the largest to smallest.
We have laid out a case study based on companies we’ve invested in, to compare the compound effect of our partnership for a founder. In the case of these three companies, our partnership drove 5x the value in ½ the time.
When Obvious Turns Problematic
First, for a bit of background, we only invest in founders who have lived their customer’s problem. This is important. We are not vertical investors. We don’t come with the expertise and connections of a particular sub-category of software looking to make a few quick connections and bounce. Instead, we partner from the earliest stages to help craft a journey to build the company the right way the first time.
The two cases Dunder Co and Veridian (obviously fake names), the founders went about building their companies the ways that seem obvious. But the obvious way often turns out problematic. As you can see in the journey, this panned out for these two companies. The lessons learned here were painful and resulted in millions of dollars wasted at the early stage (when it costs the most!).
Sabre, on the other hand, started with our best practices out front and center. The founder leaned on us time and again for our expertise. Don’t think that this journey was without its valleys. All journeys go through the dark valley, and this was no different. However, we – having been there a time or two before – could help steer the founder across while helping them resist the temptations to take the easy road several times. The impact of this was that the founder had more equity ownership of their company on the other side of the valley than either Dunder Co or Veridian founders.
The Financial Impact
The impact of $100K wasted at the early stage can cost as much as 10% of your company. The dollars needed to backfill the mistake costs you equity (let’s assume 5% for a $2m pre-seed). But then there is the collateral damage of the mistake that can go on costing thousands of dollars each year after that. The compound effects are enormous.
The Sabre founder not only avoided 3x the mistakes of the nearest performer (Veridian) but the founder also got to take home a tidy buyout sum on the journey to a meaningful exit. When we looked to finance the next round, the company was so efficient that the founder could not find productive use for all the cash. As a result, we offered to buy some of the founder’s shares allowing $1.5M in total payments for a small fraction of the founder’s position.
The Value of Journeying Together
Our advice might seem simple at times. It could seem so obvious that you could have picked it up for free. But we have found it isn’t one comment or one thought from a passerby that makes the difference, but rather the month-in and month-out journey partner that is going through the valley with you that drives the difference.