Forgive me for my naivety, but whats the point of the founders staying when you're taking out almost all the potential upside for them by acquiring them? Surely if they believed in the ability for their company to succeed long term they'd stick by it without taking an acquisition early. If your advantage is capital and experience, why would they not just go for a debt based option like clearbanc and retain their potential upside?

Clearbanc and others super useful to help short term cash flow, but its tough to get enough money out to take money off table (a lot of founders have a chance to take money off to go buy a house etc...). For example one of our portfolio company was started by 4 guys with $20K, and we just were able to pay them $4M, and then if they keep growing it they get more upside. One of the ways to grow is to increase the inventory and then increase the velocity of sales through new channels and increase in advertising. They didn't grow it in the past because they didn't want to make that investment but we have access to capital to make that investment.

Big, fat cash bonus...

Equity in big, fat growing company...

Help from shared pool of resources/experts taking a company from $5-20MM (easier) in sales to $100-300MM+ (harder) in sales much, much faster...

Help widening margins on high revenue...

Probably some sweet incentives if they do... Etc...

It makes sense. This isn't particularly innovating, but I have a feeling everyone here will be cleaning house soon enough.

Berkshire hathaway used to do a lot of this. Also, if the sellers want to retain upside, they can accept some portion of the purchase in stock from Moonshot

for sure Berkshire inspired Mark Leonard at Constellation which informs our approach

This sounded a lot like Constellation to me. Love what you are doing.

sort of reminds me of physicians or lawyers sharing a practice than going at it alone.