binarypublishKey Points:
- John Raeder, Head of Software Investments at Bow River Capital, uses a “paranoia of operational frailty” approach to assist portfolio companies in scaling from $5-$10 million in revenue to beyond $25-$50 million.
- Bow River Capital has $600 million in dry funds ready to deploy over the next three years with a 40:40:20 growth playbook: 40% for sales and marketing acceleration, 40% for innovation and product-led growth, while the remaining 20% is for systematizing the business.
After navigating through the dot-com bust and the 2008 Financial Crisis, John Raeder developed what he referred to as a “paranoia of operational frailty” approach. Through his position at Bow River Capital, where he serves as the Head of Software Investments, he has applied this approach to help portfolio businesses significantly amplify their revenue within a few years.
Raeder’s work of scrutiny extends to focusing on relationships with prospective investments, which typically take a couple of years to form. During that time, he rigorously examines the business and its feasibility amidst possible macro triggers that are common in bust periods. The team then collaborates with the founders on cultural expectations and operating models to see how his exclusive 340-page growth playbook can add value. However, the industry must be right for Raeder to invest, with industries like FinTech, construction tech, and those that can be improved through quality assurance or human capital management appealing him the most.
As Raeder explains it, when Bow River invests in a company, the team operates as full-time operators alongside the founding team for a period of 6-12 months. The focus here is on growth and transformation. The firm’s investment distribution is categorized in a 40:40:20 ratio. The first 40 percent of investment is for sales and marketing acceleration. The second 40 percent is focussed towards innovation and product-led growth. The final 20 percent is aimed at systematizing the business through introduction of standardized tools and systems to manage customer success and other customer interactions.
Looking ahead, Bow River Capital has $600 million in dry powder ready to deploy over the next three years. Regardless of possible economic instability, their stringent approach will remain unchanged. They believe that their battle-tested playbook allows them to outperform the competition.
