Investors who operate, or investors who are 'operationally inclined'?
Our team spent most of our careers at, and advising, world-class investment firms that have collectively deployed hundreds of billions of dollars across thousands of software businesses. In recent years, especially among firms targeting companies below $100M of ARR, nearly everyone brands themselves “founder friendly” and “operationally focused.” Their sites are full of gray-haired advisors and operations teams promising help with AI strategy and GTM acceleration. The approach works. These firms have strong track records and referenceable founders. But it’s worth asking what “operationally focused” actually means in practice, and why a founder weighing whether to sell some, most, or all of their business should care.
Firms lean on two things to establish operating credibility: the experience of the deal-leading Partner, and the depth of a dedicated operations team. On the first, it is rare that a growth equity Partner has actually been the CEO of a company, let alone one about to make the same journey yours is, from $5M to $20M of ARR. They’ll cite the boards they’ve sat on and the CEOs who will vouch for them. All of that gets you close to the action, but it isn’t the same as having taken enemy fire. They haven’t lain awake wondering how to hit plan if the largest customer reacts badly to losing a discount, or how to re-engage a mission-critical engineer who’s stopped showing up, or how to fold an acquired team onto different comp bands without breaking the budget or breeding resentment. Improving retention or tightening pricing matters, but that’s not the hard part.
This is one reason Blue Ladder Capital exists. Everyone on our team has been both an investor and a CEO or CXO of a software company, and has led one from $5–10M of ARR to five or ten times that. When we offer a perspective — or just pick up the phone and help you do the job — we do it having been the only person in the room responsible for that same call.
The second source of credibility, a dedicated operations team, works well but is imperfect. These are functional experts, separate from the investment team, available for a company to tap into, and usually most active after close. Many founders rightly describe them as force-multipliers. But they don’t reach every department, and some teams never interact with them at all. In our experience there is almost always foundation-building, or foundation-affirming, that should happen quickly and across every function. A bootstrapped company might have a sales team booking plenty of business but without full rep buy-in on a single pipeline methodology, and predictability only matters more as the company grows. On the product side, the team may be shipping quickly but prioritizing by whoever asks loudest rather than against where the business actually needs to go, so engineering capacity never compounds. We don’t want to be twelve months in before discovering those gaps.
We work across every department because the teams are interconnected, and one weak link drags down strong ones. If sales books meetings but marketing has no middle-of-funnel content, both fail. If sales closes deals but finance can’t generate clean quotes or collect cash quickly enough, both fail.
That’s why we built the Functional Operating Executive, or FOE, model. These are people who have worked together and know what “great” looks like, because they’ve taken both functional and dysfunctional teams to the next level. They join every company we invest in immediately, for three to six months, to prime the business for growth, then hire their replacements or leave the existing team equipped to carry it. Our FOEs are also part of the investment decision itself. If the deal team is excited about a company, the FOEs are the ones who pressure-test whether the operational thesis is real (whether the foundations can actually be built and the plan delivered) before we commit a dollar.