We’ve said a lot about what we look for in the entrepreneurs and companies we back. This post (together with Our Story) is our attempt to describe what entrepreneurs can expect from us. Specifically, the way we try to operate each and every day — and the way we strive for our actions to manifest for the entrepreneurs with whom we partner.
“Trust” is a very powerful word, and one that is often too lightly used in our view. On the other hand, “trust” is a terrific word because it embodies the broad and sincere promise that we make as an organization. To us, trust is built on three pillars — and our partners can expect that we will be true to each of them.
We bring a lot of experience to the table, but more importantly, we place a very high premium on making intelligent judgments and applying them for the benefit of entrepreneurs. When we are introduced to an opportunity, we ask a lot of questions — about the business, how it works, and the dynamics currently in play. We then listen carefully to the answers and do a lot of thinking. Our goal is to bring value to every entrepreneur we meet, whether or not we can offer them a financing proposal.
When we can offer a financing proposal, we work incredibly hard to ensure that it includes exceptional value to the entrepreneur and company, mostly by being responsive to the company’s growth capital needs, structuring it creatively, and by being highly competitive economically (from the entrepreneur’s and company’s point of view). Even when we are not able to offer a proposal, however, we’ll offer our best judgment about what would be the best alternative. In most cases, we can make one or more referrals to experts in our network -- experts that can help.
Applying experienced judgment, however, is only half of the “ability” equation. The other half is delivering. We spend a considerable amount of time and resources making sure that we deliver on the promises we make — and do so in a responsive and error-free manner. Does this mean we never make mistakes? Of course not. What it does mean is that we pay significant attention to the details and therefore don’t make a lot of them. When we do make a mistake, however, we fix it first and learn from it second. The result is that entrepreneurs, their companies, and any investors in those companies can trust that when they work with Fundamental Financial that they have chosen a partner that can offer valuable judgments and has the ability to deliver on all of our promises.
If ability is the “how we operate,” integrity is the “way we operate.” Our culture (which we nurture each and every day) is based on our own entrepreneurial roots and “doing first-class business in a first-class way.” This is how J.P. Morgan himself put it and was still the mantra that permeated his namesake firm when I worked there right out of business school in the mid-1990s. It is a phrase that made a powerful impression on me, so much so that we’ve adopted it to be at the heart of our integrity promise at Fundamental. At our firm, it can manifest in many specific ways, including that we try very hard to be entirely consistent in our communications, to communicate openly and fully, and to be loyal to the highest standards of business ethics. To the extent we align our actions with our promises, we know that entrepreneurs will be able to trust in our integrity, and we do so across the whole of their interactions with us. This is a path to which we renew our commitment each day — the path to reinforcing trust in the way we do business.
At the core of “doing first-class business” — the all-important first half of our integrity mantra -- is our ability to add exceptional value to the entrepreneurs and companies we back. So important, in fact, that it is one of the three foundational principals of our Thesis (Equally Exceptional Value). As important as our Thesis is, however, we feel it is a more powerful testament to the trust that entrepreneurs place in us. We will simply not be involved in a situation where we are not convinced that we are a highly valuable solution to the entrepreneur and company. Our goal, in fact, is to be the “superior” financial option available to them. Indeed, we won’t offer a financing proposal unless we are convinced that we would be the best option, for the entrepreneurs and their companies involved.
On the one hand, a value promise like this may seem little more than a self-indulgent rhetorical tool to pat ourselves on the back. I’m here to argue that it is much more than that -- and here’s why. We are in the risk-taking business. Being in this business means that we don’t just talk about abstract notions of risk, we actually put our money behind the ideas we choose to back. This is the pivotal reason that we won’t get involved unless we are as sure as possible that our capital will work best for an entrepreneur and his or her company. If it doesn’t, then we’re stuck in a losing proposition regardless, because our partner has lost. In the risk business, it is the best business judgment to back situations where the object of the investment (i.e. the entrepreneur and company) is the party most likely to win, and to win the most. It really is as simple as that. And is the reason entrepreneurs tell us they trust our value promise.