Beyond Capital: The Power of Value-Creating Investors

Private equity can be a strange place. There are the firms we all know of like Sequoia and a16z and smaller firms with specialized focuses and individual investors with or without domain specificity. There really is no one size fits all scenario for private equity.

Especially in high-growth startups in nascent industries like AI, B2B technology or FinTech, the role of investors transcends beyond financial support. Not all investors bring the same value to the table.

Here’s the way we see it:

There are fundamentally two kinds of investors:

1. Money people — the conventional investor
2. Value creators — active participants in your business on an operational or advisory level

The conventional investor offers capital, but little else. They see their investment as a piece of their overall investment strategy.

The value creator takes an active role in your success. From capital investment to rolling their sleeves up and providing value to the company.

This is a truth often overlooked but crucial for high-growth businesses: not all investors are great for your company.

If someone is just an investor and not an operator or strategic advisor, they aren’t maximizing their potential value to your venture. In the realm of high-growth tech startups, the need for investors who are also value creators is not just preferable; it’s essential.

Value creators are a unique breed of investors. They do more than just write a check; they bring a wealth of expertise, experience, and strategic insight. These are investors who have walked the path you’re on, understand the pitfalls, and can offer guidance that goes beyond the balance sheet. They are mentors, connectors, and strategists. When value creators invest in your company, they make moves, not just transactions.

At Cross/Section, our ethos is centered around being value creators. We don’t just invest; we immerse ourselves in the fabric of your business. Our domain expertise and deep industry experience are at your disposal. We understand the nuances of early stage and high-growth companies and the unique challenges they face. We see our role is to offer not just consulting but tactical know-how, guiding you through the intricacies of scaling a high-growth business.

Why is a value creator investor more beneficial than a money-only investor? The answer lies in their active interest in your success and growth. A value creator is invested in the truest sense of the word. They offer more than capital; they invest their time, their expertise, and their reputation. They are partners in your journey, not just spectators. Their commitment is evident in their willingness to “put their money where their mouth is,” aligning their success with yours.

As you navigate the complex world of growing a tech startup, remember that the right investor can be the difference between a good company and a great one. Seek out value creators who offer more than capital, who share your vision, and are ready to roll up their sleeves alongside you. Your choice of investors is as strategic as your business plan, and choosing a value creator could be the most pivotal decision you make for your company’s future.