FOR THE PAST TWO YEARS, Inc.‘s Founder-Friendly Private Equity Firms list has shined a light on the PE outfits that support founder-led companies through both good times and, well, global pandemics. This year, we had an epiphany while compiling the list: Private equity firms don’t have a monopoly on being founder-friendly. Venture capitalists are people too.
The good news: Whether your company is seeking venture capital or private equity, there’s no shortage of dollars to chase. During the first half of 2021, U.S. venture capital fundraising reached $66 billion in commitments, setting a record for capital raised during the first two quarters of a year, according to financial data firm Refinitiv. Private equity fundraising grew to $218 billion in commitments, the highest figure in a decade. Surprisingly, there’s perhaps never been a better time for business owners in need of investment capital.
Of course, the only money that comes without strings is money you find in the couch. Accept private equity, and the conversation inevitably turns to whether you should remain as CEO post-investment. “It could be that making your company grow from $0 to $10 million is something that only you could have done, but helping your company grow from $10 million to $100 million is not something you have the skills to do, and you need help,” says David Snow, co-founder of Privcap Media, a creative agency for private equity firms and No. 4,571 on the 2021 Inc. 5000 list. “That should be a candid conversation that takes place at the outset of negotiations.” A candid conversation, that is, between your investors, your company–and you.
Inc.‘s Founder-Friendly Investor list comprises firms identified by our editors or submitted to us through an application process. To confirm those firms’ commitment to investing in entrepreneur-led companies, we gather data on how their portfolio companies have grown and extensively interview entrepreneurs, including those who’ve exited, on their experiences with the firms. On that basis, we produce a proprietary score that determines the private equity, growth equity, and venture capital firms whose missions most significantly support startups and the men and women who found them.
From the October 2021 issue of Inc. Magazine