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You can't win 'em all
A couple years ago, Bain released a report illustrating why growth equity is such a compelling asset class. In summary, it drives buy-out-fund-like performance, with higher upside and lower loss ratios.
What's not to love? Growth equity is tremendously successful.
However, despite impressive return profiles, losses happen. And when they do, stats go out the window. Losses are felt by investors, board members, founders and their employees. Building companies is every bit as much about humans as it is the bottom line and so when things go south in a company, it should be no surprise that emotions find their way into the board room.
At this unfortunate stage in a company's lifecycle, our job as investors is to calm nerves and find the best path forward. We accept reality for what it is, we look for opportunities to return some capital to our investors, we do everything in our power to ensure a soft landing for our founders and we make decisions that we feel are in the best interests of all involved. Oftentimes in these cases there are no good outcomes, just best-possible outcomes. And it's our job to guide an emotional process through to a logical outcome.
And in the worst of times, that outcome is a zero.
Zeroes stay with you for a lifetime, but one hope it is in a way that makes us better. We grin and bear the pain for a period of time and then it's back to work. The kind of work that empowers founders to build companies, enables employees to make money and grow professionally -- and of course, generates positive returns for our investors.
And when all else fails to help us see past the emotions, we look at the statistics. We're here to do good work, but sometimes losses happen. You really can't win ‘em all, but in time we plan to win most.
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