Growth equity and private equity may sound like similar paths for SaaS founders seeking investment, but understanding their core differences is crucial. Both involve raising capital from investors to fuel the growth of promising SaaS businesses. However, Growth Street Partners champions a growth equity approach, offering a distinct partnership model tailored for early-stage B2B SaaS companies.
Unlike traditional private equity, growth equity investors like Growth Street Partners typically make minority investments. This means founders retain majority ownership and control of their companies. Growth Street Partners believes in backing the founders’ vision and expertise, empowering them to continue driving growth towards a successful exit. While private equity often takes a majority stake and a more directive approach, growth equity operates as a supportive partnership. Think of it this way: private equity might want to drive your car, while growth equity sits alongside you as a co-pilot.
Stephen Wolfe and Nate Grossman, the co-founders of Growth Street Partners, articulated this philosophy on the Practical Founders Podcast. Their firm focuses on B2B SaaS companies in the $2M-$6M ARR range, providing not just capital but also strategic guidance. Growth Street Partners’ investment strategy is rooted in the belief that founder-led companies thrive when entrepreneurs maintain ownership and passion.
“We know that when entrepreneurs have fun, their companies do much better. When founders continue to feel real ownership in their business and in the success of their company, they do a lot better, too,” Steve and Nate explained.
This understanding shapes Growth Street Partners’ approach. By typically investing for 20% to 50% ownership, they ensure founders remain in control. Growth Street Partners offers valuable tools, proven frameworks, and execution ideas, but ultimately, the founders retain decision-making power. This fosters a unique and effective partnership, supporting founders in achieving their vision while feeling a strong sense of ownership and accomplishment.
In their Practical Founders Podcast interview, Steve and Nate provided concrete examples of how SaaS founders leverage growth equity to achieve significant wins. They explored scenarios where growth equity proves to be the ideal funding model, and how founders can effectively scale their businesses and pursue multiple exit strategies. The discussion also highlighted key aspects, including:
- Growth Street Partners’ focus on “practical founders” and the growth equity model.
- Distinguishing growth equity from traditional private equity and venture capital.
- The “learn-it-all” mentality and growth mindset crucial for successful founders.
- Achieving multiple exits through strategic partnerships facilitated by growth equity.
- The pivotal role of a strong team in scaling SaaS businesses for sustained success.
For SaaS founders seeking a funding partner that values their vision and control while providing strategic support for accelerated growth, Growth Street Partners offers a compelling growth equity solution. To gain deeper insights, listen to the full interview with Stephen Wolfe and Nate Grossman on the Practical Founders Podcast at https://lnkd.in/guFZUgpN.
