The Ever-Changing Mix of Nutrients a Business Needs

by | Featured, First Principles, Investing Methodology

Pick a random plant. It could be a houseplant near you now, a random fruit tree on a farm, or even a single blade of grass in your yard.

At any one point in time, that plant has specific needs to help it grow more optimally.  It might need some water and a little bit of fertilizer.  It might need the removal of some bugs.  It might need more sunlight.  It might need all of those things, at varying levels of each.

Now, come back in a month.  That same plant will need a different mix of nutrients, and the best gardeners adjust their care to accommodate.  When the mix of nutrients is responsive to the plant, as the plant’s needs change, the plant is most likely to thrive, bear fruit and be resilient over time.

A business is very much like that plant.

The “mix of nutrients” might be better described as mix of resources and may include things like capital, software development resources, the advice of a trusted advisor, intellectual property, a key partnership, access to a given market, and so on.  And at any one point in time, the mix of resources (“nutrients”) that a business needs is specific in its measures, and changes over time.

At PermaVentures, this analogy and mental model informs every encounter we have with a company or a leader.

If we are meeting with one of our portfolio companies,  we are considering the mix of nutrients that business and its leaders need at that point in time.  If we are considering investing in a company or acquiring a company, we are thinking the same.  And when we undertake the creation of a company within our venture studio, we are thinking the same.

When we encounter any opportunity, we always like to consider the mix of resources needed to make that opportunity as successful as it can be.  When we talk to founders of early stage ventures, we’re looking for ways to support what they do with as many of our resource types as we can.  Oftentimes, we’ll contribute some of these resources as an investment, in exchange for equity.  When we are designing a deal for a potential acquisition, or a strategic partnership or a new venture arrangement, we looking for ways to connect the dots of resources we have available to make the deal as valuable for each participant as possible.

This mix of resources investment approach has informed many of our decisions in the past.  Some examples:

  • The launch of Guardian Cybersecurity out of our venture studio was a combination of capital, market access, owned licenses, software & web development “nutrients”.
  • Our current relationship to portfolio company AVVAY is as a capital investor, board seat, strategic advisory, and another one of our portfolio companies is handling the technology development of their product.

If you think you could benefit from a potential partner who thinks this way, please reach out.