Company Value Is Created — or Lost — Long Before It Shows Up in the Valuation.
The earlier that founders and investors understand what’s happening inside the company, the more options they have to change the outcome.
We spend a lot of time talking about valuations: the next round, the multiple, the mark, the exit. But none of those creates value. They report it, usually months after the fact.
The value itself is made, or lost, in decisions: the market chosen, the price set, the hire made or put off, the problem faced or explained away, the opportunity seen or missed.
By the time the valuation tells the story, most of the choices behind it have already been made. The time to understand what matters is while you can still shape what happens next.
Every Portfolio Company Becomes a Story. You Still Get a Say in Which One.
Put a few investors around a table and the stories come out.
The company that should have worked. The founder everyone believed in. The bridge that bought twelve months and changed nothing. The AGM where every question got a confident answer and none got a number. The good company buried inside the wrong strategy. The one we gave up on just before it turned.
Most investors can name the company they wish they’d understood sooner. Looking back, the signs were usually there a year before the write-down, six months before the bridge, long before the breakout was obvious. So were the options.
Some of the stories are cautionary tales. Some are about the companies we underestimated: the one we nearly passed on, the overlooked customer segment that became the whole business, the quiet one nobody was watching that turned out to be the winner. Some are comebacks. And some are the stories we’re still proud to tell years later. Some of the best companies look surprisingly fragile for a while.
Two endings, same company
Three years later, version one
“Great product, real customers. The runway kept shrinking and the updates kept getting shorter. By the time we all saw it, the only option left was a bridge nobody wanted to write.”
Three years later, version two
“Same product, same founder. A year earlier, the founder and someone who’d been through it before started asking harder questions. Pricing was wrong. So was the first market. They changed both while there was still runway to do it. Best story in my portfolio, and the founder tells it better than I do.”
You can’t control which companies run into problems, or guarantee which ones become winners. What changes is how early the important things are understood, and how many options remain when they are. The company on your mind today will become one of these stories too. Its ending may not be written yet.
↓It starts being written the day the round closes.
The Pitch Was a Thesis. Now the Company Gets to Test It.
That isn’t necessarily a broken thesis. It’s what happens when a company meets reality.
No company develops the way it looked on the day the round closed. Customers take longer to buy. A segment nobody prioritized turns out to be the best opportunity. The product works; the go-to-market doesn’t. A sales engine that worked at $5 million stalls at $20 million. The organization outgrows the systems and leadership model that got it here. Or everything simply takes twice as long.
Building the company is how everyone finds out which assumptions were true. Changing the plan in response to evidence isn’t failure. It’s the work.
↓The hard part is seeing, in time, which assumptions have stopped being true.
Founders Are Too Close. Investors Are Too Far.
The founder sees the customers, the team and the daily reality an investor never will. The investor sees patterns across companies, markets and rounds that a founder may meet only once. Both views are honest. Both are incomplete. And most boards meet every few months, while the company makes decisions every day, some of the hardest of them before there’s enough information to feel comfortable making them.
It isn’t a trust problem. Sometimes a founder is holding something back. Sometimes the investor is wrong, or the board is part of the problem. Often nobody is wrong and the market simply moved. Smart, honest people in both chairs, acting in good faith, can still miss the whole picture.
Nobody builds a difficult company entirely from one chair.
↓And the longer the picture stays incomplete, the more it costs.
Revenue missed. Burn went up. The sales cycle stretched. The next round keeps slipping. Those are facts. What they mean is another matter. Is the market wrong, or just the segment? Is the product good but the positioning weak? Is it pricing, sales execution, leadership capacity, too many priorities? Or is this simply what building a hard company looks like, and management needs time? Each answer leads to a very different decision.
The Cost Curve Only Runs One Way
Delay makes problems more expensive and opportunities smaller.
Earlier understanding creates more options. Time removes them, on the downside and the upside.
| Found early | Found late |
|---|---|
| A pricing problem is a positioning conversation. | It’s a runway problem. |
| A capability gap is a hire, or a few months of focused help. | It’s a leadership crisis. |
| A sales engine that stops scaling gets rebuilt. | It gets funded for another year, and the inefficiency scales. |
| The wrong market costs a quarter. | It costs a year and a round. |
| An emerging customer segment becomes the next growth engine. | It becomes a competitor’s. |
| A breakout signal means an early follow-on at a fair price. | It means paying up in the next round, or being crowded out of it. |
| A company that should be sold is sold on your terms. | It’s sold on the buyer’s terms. |
Seeing it early doesn’t remove the risk. It gives you more of the picture while there’s still time to act: fewer losses that didn’t need to happen, and fewer winners that never reached their potential.
↓Multiply that across a portfolio, and it stops being a story about one company.
Every quarter a problem goes unseen is runway the company doesn’t get back, and time the fund doesn’t either: follow-on capital that funds more of the same, a round raised from a position of weakness, a fixable company that becomes a write-off, a partner’s month or an angel’s year consumed by one company. Portfolio surprises are rarely sudden. They’re just seen late.
You Can’t Pick Every Winner. You Can Change the Odds.
It was never just about the multiple.
Most of what moves the odds is out of our hands: the market, the timing, luck. But not all of it. How early a company sees its problems and its opportunities, how well it makes its big calls, and whether it has the evidence, focus and capability to act on them are the variables still in play after the cheque clears.
Across a portfolio, that’s where returns are quietly made or lost:
- The company that can recover. A likely write-off that returns capital, or more.
- The solid middle. A decent company that becomes a strong one, instead of drifting.
- The follow-on. Capital that goes where it will compound, not where it will hide a problem.
- The breakout. A winner that doesn’t stall at the next stage, and becomes bigger than anyone planned.
- The exit. A sale prepared in advance, on your terms rather than the buyer’s.
- Your time. Months back from the fire you’d otherwise be fighting.
Small changes in a few outcomes can materially change a portfolio’s economics.
↓None of those changes happen in the valuation. They happen somewhere else.
Higher multiples, yes. But for most of us, the list is longer: to be right about the founder we backed; to get our capital back when things go sideways; to put the next cheque where it will do the most good; to exit on our own timing; not to lose a year of our lives to one company. And, for many of us, to look back and say we helped build something that mattered. Every one of those depends on the same thing: good decisions, made early, inside the company.
Valuation Is the Scoreboard. The Game Is Played Inside the Company.
The things that eventually move the multiple happen long before anyone discusses it: management understanding its customers, commercial assumptions tested instead of defended, fewer and clearer priorities, the right people arriving before the company desperately needs them, capital following evidence, and a company that runs a little less on hope and a little more on proof. The decisions that determine what the company becomes are the same decisions that determine what the investment is worth.
| From | Toward |
|---|---|
| Periodic updates | An operating-level understanding of what drives them |
| Surprises at the board meeting | Early signals, while options remain |
| Worry about everything | Clarity on what matters, and what doesn’t |
| Follow-on capital based on conviction | Capital tied to a clear plan and milestones |
| A leadership team carrying too much | Capability added where it creates the most leverage |
| A pitch built on potential | An investment case built on evidence |
| Exit as a future event | A company becoming more valuable, and exit-ready, along the way |
A stronger company creates more options, for the founder and the investor alike.
↓Nowhere is that tested harder than when the company asks for more capital.
See the same work from the founder’s side: Technology & Growth Companies →
More Runway Only Helps If You Know What You’re Running Toward.
Same question, different chairs.
When a company is raising again, the investor asks: should we put more in? The founder asks: what will this money let us prove or build? Underneath, it’s one question.
Will the money scale something that already works? Fix a known constraint? Build a capability the company now needs? Reach a milestone that changes the investment case? Deploy growth capital faster than the organization can absorb it? Or buy another twelve months without changing whatever made the company need the money?
The most expensive mistake isn’t always backing the wrong company. Sometimes it’s putting capital into the right company for the wrong reasons.
↓A new round is one of the moments investors pick up the phone. It isn’t the only one.
Sometimes the answer is more capital. Sometimes it’s sharper focus, a missing capability, more evidence or more time. We work with management on the operating reality behind the question: strategy, commercialization, capability, milestones, use of proceeds, and what has to become true for the next stage to work. A good answer helps the investor allocate capital. It also helps the founder raise it. We bring the operating evidence; the investment decision stays yours.
Some Companies Need a Second Opinion. Some Need a Second Pair of Hands.
Understanding only matters if it changes what you can do next.
Management knows this company better than anyone. Investors see patterns across many. A useful outside perspective adds something different: close enough to understand the operating reality, independent enough to question assumptions, experienced enough to recognize patterns, and able to help act when that’s useful. That’s the role we play: working beside you as your operating partner inside the company, with the founder’s full knowledge. These are the moments investors, and founders, tend to call.
It’s Working
“What if this is bigger than we thought?”
Value-creation planning · Scaling the commercial engine without breaking what works · New markets, strategic partnerships and enterprise expansion · Milestones, KPIs and operating cadence
Something Doesn’t Add Up
“What’s really going on?”
Independent strategic and operational diagnostic · Root causes beneath the symptoms · Runway and scenario planning · A recovery plan with clear owners
Diagnose →
The Company Is Raising Again
“What will this round actually buy?”
Use of proceeds and milestone-linked capital plans · Next-round readiness · An investment case built on evidence · Financial model and investor preparation
The Company Has Reached Another Stage
“What does it need now that it didn’t need before?”
CEO & founder advisory · Organization design, systems and leadership depth · Capability gaps and hiring sequence · Interim & Fractional Executive Leadership · Special projects
Execute →
It’s Time to Realize Value
“What would make this company worth more to someone else?”
Exit readiness · Strategic options: sale, merger or partnership · Positioning for acquirers and strategic buyers · An orderly wind-down, when it’s the right call
Before You Invest
“Is the business as good as the deck?”
Operating and commercial diligence · Market, pricing and go-to-market assessment · Management capacity review · Use-of-proceeds and milestone plan
Diagnose →
The response should fit the situation. Sometimes it’s a major intervention. Sometimes a little experienced help. Sometimes what’s missing isn’t a person at all, but evidence, focus or a decision. Sometimes more capital, sometimes less, sometimes patience. And sometimes it’s: leave it alone, management has this.
The Fires Get Your Attention. The Breakouts Earn It. The Middle Is Harder.
Most portfolios have companies that aren’t obviously winning or losing. They’re progressing, just slower than planned. The team is working hard, customers exist, nothing is obviously broken, but something isn’t compounding. Those companies can sit in the middle of a portfolio for years. Some are weaker than they look. Others have more potential than the current numbers reveal.
A second set of experienced eyes usually reaches one of three conclusions:
“There’s a real issue here.”
“There’s an opportunity we’re underestimating.”
Or: “The company is on track. Here are the two things worth watching.”
All three are worth knowing.
A senior operator on call for portfolio questions and board preparation
Specialist support through our network where it’s needed
↓None of these moments are theory. I’ve lived most of them, from both chairs.
I’ve Made Good Investments and Bad Ones. The Bad Ones Taught Me More.
Entrepreneur · Angel Investor · Executive Chair · Founder · CEO · Solutions Architect · Advisor
I’ve been building companies for close to 30 years, and I can count on one hand the years I’ve spent as an employee. I’ve been the founder, and I’ve invested in founders: my own money, mostly small cheques and a few that were large by Canadian angel standards, and my share of term sheets. Some worked. Some didn’t. I’ve backed founders I thought I understood and later found I didn’t, and sat through AGMs where getting basic numbers was harder than it should have been. Some of those were the founders’ mistakes. Some were mine. I’ve sat through enough meetings to know that difficult outcomes rarely arrive without warning.
I’ve met plenty of investors who wished they’d understood a situation sooner, and plenty of founders who wished someone experienced had been in the room when it mattered.
I’ve also been on the other side of the table: the founder writing the update, the CEO explaining a hard quarter to the people who backed me, making big calls with less information than I wanted, and holding onto some assumptions longer than I should have. At LavaPay, I learned that a business can be working and still no longer deserve additional capital. When a banking partner’s exit broke the economics, I chose to stop rather than keep spending money hoping reality would change.
The investor in me wants to know what’s really happening. The founder in me knows why it’s hard to say.
When I’m in one of your portfolio companies, you’ll get my best read. So will the founder. — Mike Nabavi
↓Which is why how the work is set up matters as much as the work itself.
- Investing taught me not to confuse conviction with evidence.
- Operating taught me not to confuse a missed plan with a bad company.
- Building technology taught me that a good product doesn’t automatically become a good business.
- Shutting a company down taught me that preserving capital and people’s time can be worth more than carrying on.
LavaPay
Capital discipline
Zero to payment licensing and revenue in 13 months, with a pipeline trending toward $9M in monthly transaction volume, then a deliberate wind-down when the banking economics broke.
GuestTek
Path to liquidity
Wrote the first version of the business plan behind its TSX IPO prospectus ($24M raised).
The Tribe
The portfolio view
Founded and sold a startup hub and accelerator.
- Executive Chair of Omnieon, a federated financial-infrastructure company Mike conceived and architected.
- Nearly a decade leading IntroJunction / Other.ly.
- 25+ years advising the banks, ministries and enterprises that are often your companies’ hardest customers to win, and their most likely acquirers.
If the Founder Thinks We’re There to Inspect Them, We’ve Already Got It Wrong.
Sometimes an investor brings us in, sometimes the company does, and often an investor makes the introduction and management engages us. Any of those can work. What doesn’t work is ambiguity. Everyone knows who engaged us, what we’re there to do, what success looks like and how information will be shared, before any work begins. If you’re the founder reading this, that includes you.
We’re not there to grade management or run a second reporting channel. For the founder, the work should mean a confidential place to test assumptions before they become commitments, another perspective on patterns that are easier to see from outside the day-to-day, clearer priorities, and help acting on them. For the investor, it should mean an honest read on a stronger company. The objective is the same for both: build a great company, reduce avoidable risk and grow its value.
Four ways to start:
Independent Company Review
Engaged by you
A focused, operating-level assessment of one portfolio company, done openly with management, with findings shared as agreed. The goal isn’t to evaluate management; it’s to strengthen the company.
Diagnose →
Portfolio Company Support
Engaged by the company, often at your introduction
Planning, next-round readiness or a special project, worked through with management inside the company.
A Fractional Executive Beside the CEO
Engaged by the company, often at your introduction or with your support
A senior executive on call for the difficult decisions, a sounding board when the CEO needs one, and a second pair of hands beside the CEO when the work needs doing. Always in support of the CEO, never in place of them.
Investor Advisory
Engaged by you
An experienced operating perspective on a portfolio company, a board discussion or the operating side of a big decision.
Contact →
If the work gives the investor clarity but gives the company nothing, we’ve designed it wrong.
↓And there are lines we don’t cross.
Introducing us to a founder? This is the page they’ll read: Technology & Growth Companies → · Founder-Led & Owner-Operated Businesses →
The Investment Decision Stays Yours.
We don’t replace the board or management. We don’t make investment recommendations, value companies or provide fairness opinions, and we don’t act as your investment banker, lawyer or accountant. Where specialists are needed, we work alongside your advisers or bring the right people in.
We work with your portfolio companies and bring the operating evidence. You make the call.
A Few Things People Ask
Not when it’s set up properly. We meet management early, agree the purpose and scope, and settle how findings are shared. The work has to create value for the company, not just information for you. If a founder feels monitored, the engagement was designed wrong.
There can be many reasons, and we don’t speculate. We start with management, explain why we’re there and what we’re trying to understand, and work from the facts. If important information stays unavailable, that becomes part of the picture, and we’ll say so plainly. In our experience, many founders welcome the extra support once they see who it’s for.
Either, and sometimes both. What matters is that everyone knows: who engaged us, what we’re responsible for and how information is shared, settled before the work begins. No surprises.
No. We help you understand what sits underneath that decision: performance, capability, milestones, use of proceeds, execution risk and what the company needs to achieve next. We can also give you a high-level operating risk map, and our view of what would most likely move enterprise value. The investment decision stays yours.
Good. We’re not looking for problems for the sake of finding them. Sometimes the opportunity is to make more of the momentum. Sometimes the right answer is to leave it alone.
Yes. In some ways angels have the harder problem: no platform team, limited information rights, often no board seat, and their own money at risk. It can start with one company and one question.
Yes, selectively. We work directly with a limited number of companies at a time and draw on our network for parallel or specialist work. Before accepting any engagement, we check for conflicts, including competitors. Each engagement has its own confidentiality terms, and nothing learned in one company is shared with another.
Which Company Came to Mind?
Its story isn’t finished. Start there.
Maybe the numbers aren’t quite adding up. Maybe another round is coming. Maybe the company has reached a stage it hasn’t been through before. Maybe something is working and could become much bigger than anyone planned. Or maybe nothing is obviously wrong, and you’d simply like an experienced second look before a big decision.
Tell us what’s happening. If there’s a useful role for us, we’ll tell you where we’d start. If the company is fine, we’ll tell you that too. And if someone else is better suited to the problem, we’ll say so.
Founder whose investor suggested we talk? Start here: Technology & Growth Companies →
Mike Nabavi · 604 653 5602 · mike@nabavi.ca
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