Should You Raise Capital? What Growth Investors Really Look For with Isabelle Tashima

Most founders spend too much time asking how to raise capital and not enough time asking whether they should raise at all.

In this episode, I sit down with Isabelle Tashima from Volition Capital to unpack one of the most misunderstood topics in startup growth: growth equity. We break down what growth equity actually is, how it differs from private equity and venture capital, and what founders need to know before taking outside investment.

Isabelle explains why capital should accelerate a business that's already working—not fix one that isn't. We discuss the signals growth investors look for, how founders should think about timing a raise, and why maintaining control is often less about ownership percentages and more about choosing the right partner.

We also dive into what makes a company truly investable:
• Repeatable and scalable revenue growth
• Strong unit economics
• Customer retention and expansion
• Clear go-to-market execution
• The ability to explain growth drivers beyond headline metrics

And, of course, we tackle AI. Isabelle shares why simply saying "we use AI" is no longer a differentiator, how AI is changing capital efficiency for growing companies, and the question every founder should ask:

"If the underlying AI model became a commodity tomorrow, would your business still have an advantage?"

In this episode, you'll learn:

✓ When growth capital makes sense—and when it doesn't
✓ How investors evaluate founder-led businesses
✓ What separates investable companies from the rest
✓ How to think about ownership, control, and long-term partnerships
✓ Why AI alone won't create a durable competitive advantage

Whether you're considering raising capital, staying bootstrapped, or preparing for future investor conversations, this episode provides a practical framework for making better growth decisions.

Follow Scaling with People for more conversations on building companies that scale without breaking.

Transcript

Why Growth Equity Matters

SPEAKER_00 0:02

Welcome to Scaling with People, your weekly playbook for turning chaos into compounding growth. Each week we go under the hood with battle test experts in all areas of business, from marketing to sales, operational finance and people, plus product and leadership, to unpack the plays, numbers, and systems that turn chaos into compounding growth. Learn straight from founders and experts who've done it and continue to do it successfully. There's zero fluff, just means that you can still immediately know. This podcast is brought to you by Guide to HR, human expertise for AI-powered impact. Welcome everyone to today's Skilling with People podcast. I'm Gwynavir Curry, your host and executive advisor and fractional CHRO for Guide to HR. On today's episode, we're ripping the velvet curtain off growth equity and asking the questions founders actually care about. How do you fuel the next stage without handing over the keys to keep it down for? I have Isabel Takuma here with me today, who's from Volition Capital and brings an investor-side playbook for breaking down what discipline scaling really looks like and why perfect metrics are overrated and how founders can tell a story investors are smart enough to bet on. This is going to be a great episode. Isabel, welcome. Can't wait to dive in. But before we do, tell the audience a little bit more about yourself.

SPEAKER_01 1:22

Yeah, thanks so much for having me. I'm an investor at Volition Capital. We are a Boston-based growth equity firm. We've been around for about 16 years. We're typically partnering with technology founders who have built businesses that have found product market fit and they're looking for growth capital to take it, take the company through the next stage of growth. So typically we're writing checks anywhere in the $15 to $70 million range. We'll come in as minority investors in companies that have found product market fit. So typically in the $5 to $50 million of revenue range.

SPEAKER_00 1:56

I love that. So let's kind of like deal with definitions and not have any confusion as we start.

Growth Equity Versus VC And PE

SPEAKER_00 2:03

Most founders hear growth equity and they think late stage PC, what is it actually and what is it not?

SPEAKER_01 2:10

Yeah. So growth equity sits kind of in a distinct middle ground. Compared to early stage venture, we're not underwriting pure potential, like a founder with an idea, which typically has a higher risk reward profile. And those fins are often investing in a large portfolio of companies, which is highly diversified, given the risk reward profile is higher. Compared to late-stage private equity, we come in earlier, we're taking a minority stake, typically series A, series B, and we're building a more concentrated portfolio of companies. So we're really showing up for companies rather than managing dozens kind of at arm's length.

SPEAKER_00 2:56

Okay. So what has to be true about a business for growth equity to even be on the table?

When Raising Capital Makes Sense

SPEAKER_01 3:02

I think the first question that founders have to ask themselves is do we even need to raise capital at all to begin with? I think right now, especially with everything that's going on with AI in the market, there is this sort of peer pressure to go out and raise capital, especially with this AI framing. But I think for a lot of businesses, it actually doesn't make sense to raise capital. I think capital should be something that's accelerating what's already working. And it should be of the mindset of, hey, if we don't raise, we're leaving opportunity on the table. And it should be the point in which actually capital is the bottleneck to capturing that opportunity that makes you go out and need to raise. It shouldn't be something that is done just because other people are doing it or to fix things that aren't working. So as a founder, you really want to have a strong foundation from a unit economics perspective that you feel is repeatable so that if you go out and raise capital and um throw fuel on the fire, you know it's exactly what's going to happen and um it should be additive to your business.

SPEAKER_00 4:09

Yeah, that makes sense. I have uh one founder I know who's like, hey, we have all this money in the bank account, but we know how we're gonna spend it. So we also then are forecasting we're gonna need more down the road. Let's actually fundraise earlier than what right around the time when we're gonna need money again. What is your perspective on that? Is it better to do it a little bit earlier? Is it better to be closer to when you need it? Like, what's the right time frame on someone wanting to fundraise?

SPEAKER_01 4:36

I think there are trade-offs. Um, oftentimes, founders, um the right partner comes along when they're not exactly expecting it. It could be a cold email, um, it could be a warm introduction. And um, we often tell even our own portfolio companies like to prioritize the partner in which you choose, not exactly the timing or the valuation, because these are often very long-term relationships. It could be a five to 10 year relationship with an investor. Um, and so that matters who you choose because those people aren't just gonna be around for the good conversations or the good board meetings or the celebrations. Um, they're also gonna be the ones in your corner when things aren't going right, which is pretty inevitable. Like the path to scaling a company from five million of revenue to hundreds of millions of revenue is not a straight line. And so um I think there are pros and cons in terms of understanding the timing to a raise. Um, but I think sometimes it's often pretty organic. Like it just happens where you meet the right partner and you know where capital could be spent and you feel the opportunity is there. And I think when all those three things line up, it makes sense to move forward. Um, but then there are also founders that, you know, they want to protect their time, they want to remain focused. And so they will go out for a fundraise and run a very formal process. And I think there are pros and cons of both.

SPEAKER_00 6:06

Yeah, and especially the formal process. That's a lot of time and energy. And I've seen it, I've experienced it with CEOs and founders I've worked with in the past where they disappear out of the

Timing The Raise And Picking Partners

SPEAKER_00 6:16

business. So if you're going to do that, you also need to make sure you have the right structure in place for the business to continue carrying on and not crumble in your absence. Uh that's one thing I'd call out. But what have you seen in regards to founders who do kind of step outside of the business to go fundraise? What's, you know, if there's a founder listening right now, what's something that they should be thinking about in preparation of potentially stepping outside of the business to do that?

SPEAKER_01 6:40

Definitely, because fundraising can take a lot of time, especially if you don't know exactly what you want in a partner or what a partnership looks like with different types of funds. There are a lot of funds that won't be a good fit for your business. Even if your business is, you know, really has really strong metrics, is in a super interesting segment of the market. And um, there are just funds that it won't be a good fit from a mandate perspective. So I would say um make it easy for funds to say no and to drop out because that will help you protect your time and um make it faster to find the funds that are actually good fit from a mandate perspective and that believe in you as a founder. So I think leading with, hey, these are the reasons why it might not be a good fit for you. Um, and asking for feedback quickly will help you as a founder find the right funds. Um, I think also it's important to have the right processes in place structurally so that the business isn't crumbling if you need to take some time, um, because often it is a couple months to fundraise and go through diligence. Uh so that's also an important consideration. I think right now, especially with the rise of AI, we're seeing smaller and smaller teams from an efficiency perspective. Um, that's super exciting because it means that companies can be that much more capital efficient. But also it might mean that you have that many more or less people that are supporting the internal processes. So I think just understanding the time that it will take to fundraise, and um, that's time that you're probably not spending on running your business. So making sure that you have the infrastructure and the people and the team in place to support that if you do need to take a couple of months uh to focus on fundraising.

SPEAKER_00 8:22

Yeah, because the last thing you want to do is come back with all this money that you fundraise and then you come back to a company that you spend all that money trying to get it back to where it was before you left fundraising, right? That would be awful.

Control Ownership And Minority Deals

SPEAKER_00 8:33

So as the founder's thinking about potentially partnering with someone like Volition, what how do they think about the control when they're bringing on partners?

SPEAKER_01 8:42

It depends on what type of partner you're bringing on. So here at Volition, we're typically taking a minority position. Um, so we're not looking to come in and change things about the business or operate the business in any way. We're looking to partner with founders to accelerate what's already working. There are some funds that will, especially on the PE side, um, they're acquiring the majority of the business, sometimes the full business. And in that case, there's some level of um, you know, they have operational control. And um, they're often, if they're using debt, focused on the bottom line, they might come in and make a bunch of changes to the business from a cost perspective. Um, so I think it depends on, as a founder, what you're looking to do. Are you looking for a full exit? Are you looking for a partner to help you navigate the next five to 10 years ahead of an exit? Um, or are you earlier on and you're looking for somebody to help you get your idea off the ground? And that all kind of dictates the type of fund and the type of partner that you would be looking for.

SPEAKER_00 9:40

I know you said earlier you guys focus more on the five, five to fifty million, five to five zero million dollar revenue. In regards to that structure, what do you normally, what's like the average ownership a founder usually has between themselves, the investors, and even some equity with their employees? Do you see it in like the 50 to 75% range? Is it less? Is it more? What do you what do you typically see?

SPEAKER_01 10:05

Here at Volition, we're typically partnering with very capital efficient businesses. And honestly, a lot of the companies that we end up partnering with were fully bootstrapped prior to us coming in. So in that case, the founders um own the whole business. There are some cases where maybe the founder has raised a bit of outside capital prior to us coming in. Um, but we prefer that our founders that we're partnering with still retain meaningful ownership because we want them to have skin in the game. We're backing them at the end of the day. And we still view this as a people business. Like they are a big part of our investment. And so we want them to still have pretty meaningful ownership of the company even after our investment. Um, so I would say it ranges. Typically, it is on the higher side in terms of what the founder has before we come in because we are um focused on these capital efficient businesses that typically haven't raised too much outside capital prior to us coming in.

SPEAKER_00 11:01

That makes

What Great Founders Do Differently

SPEAKER_00 11:02

sense. So as a founder listening, I'm kind of thinking, okay, well, what does a great founder look like from your side of the table versus just a fundable one?

SPEAKER_01 11:11

It's a good question. Um, we don't have kind of boxes that we have to check from a founder perspective, but I think that there are like typically um recurring themes that we often see. I think a lot of the best founders aren't afraid to lead in investor conversations with what's not working in the business. And that might sound counterintuitive, but um from the investor side, we want to be able to add value to the business. And we're not looking for a company that has these perfect metrics across the board on every category. Generally, the metrics do have to, you know, look pretty good at the highest level, but it's rare that you're gonna find a company where everything is going perfectly. Um, we also prefer to be able to add value to the business. And so um, I think great founders that are self-aware about, hey, this is what's working, this is what's not working, this is what we could use help in, um, and is also self-aware enough to know, hey, I need to start delegating over time. Like what brought me from zero to five million in revenue is not what's gonna bring me from five to five hundred million in revenue. And so typically in those early stages, founders are touching everything. They're doing sales, they're doing the hiring, um, they're doing the customer support, they're touching every part of the business. And that isn't sustainable over time. And so I think the best founders are able to recognize, hey, we need to raise money, we need to grow the team, I need to start delegating, I need help building out the processes that are gonna take us through this next stage of growth. And that's not gonna involve me touching every part of the business, but hey, here's where you can help and here's what's not working. Um, and so I think the founders that want to paint this perfect picture of my company has perfect metrics across the board. We don't need help from investors, um, maybe that company isn't the right one to go out and raise capital from an investor because we do want to feel like we can add value and we want to feel like it's a genuine partnership where there is this two-way dialogue back and forth.

SPEAKER_00 13:14

Yeah, that makes sense. Kind of goes almost to what I was gonna ask, and maybe you can dive in a little bit more about it is you know, if I'm a business that's doing 10 million in revenue, I'm profitable, why wouldn't I just bootstrap? Why would a listener who's maybe in that situation want to consider partnering with someone like Volition?

SPEAKER_01 13:34

Definitely bootstrapping is a very justified path. And um, if your company is super profitable and you don't need capital, you feel like you're not capital constrained in any way in terms of market opportunity, then the answer is you should continue bootstrapping. And that's definitely a viable path for a lot of founders. Um But I think when capital becomes the constraining factor, that's when it makes sense to go out and raise. Um, so whether that means, hey, we want to develop this new product and we believe there's a huge market opportunity here, um, or it could be we want to start doing strategic acquisitions, or we need to grow the sales team and we need to hire ahead of the curve. Like those are all reasons that make sense to go out and raise capital. Um, and then it comes down to, okay, who makes sense from a partnership perspective? And what do what does an exit look like for me? What do I consider success in my mind? What does a, what does my partner consider success? Um, because those differ based on the fund, the mandate, um, the stage. So I think it's kind of a sequential process where you have to decide as a founder, does it even make sense for me to raise capital? Um, and then from there you can kind of go down into, you know, what does the ideal partner for me and my objectives and the company's objectives look like?

SPEAKER_00 14:55

Yeah, that makes sense.

Investable Stories And Durable Metrics

SPEAKER_00 14:57

So curious, kind of splipping the topic here about more in the regards of scaling with discipline. You said it's not about perfect metrics, it's about telling a compelling story. What makes a story investable from your perspective?

SPEAKER_01 15:12

There are a lot of companies that I think prioritize speed and they prioritize revenue growth and headline metrics and um, you know, growth, this growth at all costs type of model. But I've heard that plenty of times. Yes. In our view, we're much more focused on quality. So when we look for sustainable growth, what is repeatable, what is predictable, um, what is supported by the right systems, the right people, where we feel like we could put more capital on top of it and we know what's gonna happen. Um and so I think the best companies understand where growth is coming from, what levers are driving it, um, what's making the most impact, where their customers are coming from. So when we due diligence on a company, we're trying to really understand, take a look under the hood to understand what those unit economics, what those fundamentals look like. And we're looking for businesses that have repeatable unit economics, that have a scalable go-to-market motion. And that kind of means like understanding where your customers are coming from, how much you're paying to acquire them, what channels are most effective, um, customer behavior. So, like how long are your customers sticking around? Um, are they expanding over time? Is it, is there a big churn problem? Um, and so we're trying to look at all these, all these metrics together to paint a picture of, okay, what does the actual foundation of the business look like? Um and so headline metrics are great. I think it's easy for a company to post on LinkedIn, hey, we're growing 500%. But I think it matters more to take a look under the hood and understand, is this durable, is this sustainable? Um, and we're looking for the companies that are built on that foundation of durable unit economics, um, customers that continue to come back over time. And I think that helps us also answer the question like, is this company solving a real problem in the market? And do they have customers that love it? Because at the highest level, that's the question that we're trying to answer when we are doing diligence on a company.

SPEAKER_00 17:19

Yeah. And I love the fact that like speed, I hear that all the time, but I also hear scrappiness, right? Be scrappy and get it done. Speed and scrappiness. So at what point in time do either or both of those become a liability instead of a strength for a business?

SPEAKER_01 17:34

A lot of the founders that we partner with are super scrappy because historically they've done a lot with a little. These are companies that have found product market fit. They have customers, they have millions in revenue, and a lot of them have raised no outside capital. So scrappiness is definitely important to us. I think where scrappiness can be a bottleneck is if it prevents founders or um executive teams from wanting to delegate and build out the processes that they will ultimately need to take them to the next stage of growth. Because there's only a certain level of scrappiness, I think, from for an early stage startup that will take you so far, but it is kind of a hurdle to start to build out a formal sales team, a whole go-to-market org, and to start delegating tasks that founders have historically done themselves, which can be hard for the mindset of a very scrappy founder that wants to do everything with a tiny team and touch every part of a business. So I think it is a hurdle that we do tend to work through with our founders, but scrappiness in our eyes is a positive. Like we want founders that are out there doing a lot with a little because that's something that we look for from a capital efficiency perspective.

SPEAKER_00 18:48

Yeah. And I feel like we'll get into AI in a moment, but I feel like AI is helping some of these founders stay scrappy, right? Because they don't need a marketing team of 20 people. They probably don't even need one, right? They could potentially use AI functionality or an agency. But I'm curious from your perspective, how do you spot when a founder has become or is about to become the bottleneck for the business?

SPEAKER_01 19:12

It's a good question. Um, oftentimes we look at it from a sales perspective. So if they have way more demand than they can support internally, then it's time to hire more people. Um or if if we feel like the go-to-market motion is repeatable and they're not spending enough on sales and marketing, that's where we can say, hey, like this is working. We need to put more fuel in the fire. So I think it's looking at metrics that can tend to be leading indicators for um the business is inflecting and we need to spend more because the opportunity is there and we know what's gonna happen when we spend more. So we're looking for those indicators that can help us um understand that we can spend more with what we're gonna get from a returns perspective. So um, those are things we monitor from a sales perspective. And I think that's often a good indicator for what's happening on the demand side.

SPEAKER_00 20:06

Okay, that makes sense. Yeah. And so when do you guys bet on a founder versus the actual business? Or do you always bet on the founder versus the business?

SPEAKER_01 20:16

The founder is a big part of the story at the end of the day, like investing is a people business. And um, the line is not straight, as I mentioned. Like we we we want to feel like um in those hard moments, the founder um is committed to the business and we backed them because we have confidence that together they can figure it out. So um I would say it's definitely both for the stage that we operate in. We're looking for businesses with strong fundamentals that have found product market fit and are solving a real need in the market and have a competitive mode, all those good things. But we are investing a good part of our investment is also partnering with a founder. And that's why we want them to have a meaningful um ownership position because they are a good part of the investment as well. So I would say it's definitely a mix of both.

SPEAKER_00 21:08

Yeah, that makes sense.

AI Raising The Bar For Moats

SPEAKER_00 21:10

So getting now into AI, uh from your seat, from investors' seat, how is AI changing what qualifies as a scalable company today?

SPEAKER_01 21:19

It's definitely an exciting time in the market. I mean, things are changing so quickly. Um, and the universe of opportunities is also evolving very fast. Um, so it's an exciting time to, I think, be both on the investing side, also on the operating side. I think on the operating side, it's dramatically lowering the costs of experimentation. Um, so companies can ship new features faster, they can build faster, they can move faster. Um, and it's increasing the leverage of, as we mentioned, very small teams. So entire departments that used to need, you know, 10 plus people can now be fully automated or at least augmented. To have less people. So, from our perspective, that's opening the universe of capital efficient companies that now qualify as capital efficient in our eyes, which is exciting from the investment perspective. And we're seeing founders that are accomplishing things that would have required much larger organizations just a few years ago. So the whole profile is changing. I think the bar from an investment perspective, though, is getting higher. Like it's not enough to say we're using AI. I think at that point, at this point, it's now table stakes that companies are using AI. We're now starting to think about like what is durable, what is differentiated, what is sustainable long term. And that's a hard question to answer, just given how quickly things are changing in the market.

SPEAKER_00 22:48

Yeah. So what signals do you look for that tell you a company is actually using AI well and not just talking about it, or you know, is beyond those table stakes that you just mentioned?

SPEAKER_01 22:59

I think a good question to ask is like if the underlying AI model that this company is using got commoditized tomorrow, would this company still have a business? And I think if the answer is yes, like if there's a deep data mode, if there's domain expertise, if there's, you know, genuine workflow integrations that can't be replicated, or even a really strong like brand halo, then yeah, it could be a structural advantage for them. Um but if the answer is no, and it's basically like a UI wrapper around a third-party model, and it's simply then in that case, like AI is simply a feature that might get competed away over time, given how quickly things are changing. Um so I'm spending a lot of time on that question, like trying to figure out what is structurally a competitive advantage and what's simply like a wrapper that they're using from a positioning perspective to call it, hey, we're AI enabled or we're AI native.

SPEAKER_00 23:59

Yeah, that

Scaling Myths And Creative Distribution

SPEAKER_00 24:00

makes sense. So as we wrap up today's call, what's a belief about scaling that you think is completely wrong out there?

SPEAKER_01 24:08

I think a lot of founders think that there's one playbook to scaling a company. It's like, let's hire sales reps and let's go outbound and sell the product. I think nowadays we're seeing founders with much more creative go-to-market motions. Um, and I don't think the playbook is the same across companies. Like there's a lot of companies right now that I think are learning to leverage social channels as a distribution method that is giving them a real structural advantage from a unit economics perspective. I think it's to allow your customers to become your marketers is an underrated go-to-market motion that I don't think a lot of founders are leveraging as much. Um But in this day and age, I really think that the days of having a very strict playbook to scale a company and to go out and sell a product, I think those days are over. And it requires creative distribution. I think it requires thoughtful branding. Um, and I think founders can't underestimate the power of community as well. Yeah.

SPEAKER_00 25:15

Well, thank you, Isabel. That was great. I learned a lot, and I hope those listening did as well. Uh, and we appreciate all the insights you've provided. And for those founders who are bootstrap or thinking about finding a partner, you know, there's definitely opportunities. You don't have to necessarily go out of the big firms. And sometimes that might not be the right fit, as Isabel said. So thanks again, Isabel. And for those listening, we look forward to seeing you on our next podcast next week. Until then, have a great one, everyone. Thanks so much. Thanks.

Closing And How To Connect

SPEAKER_00 25:42

That's a wrap for today's episode of Scaling with People. If you got value from this conversation, do me a favor, share it with someone building something big. And hey, I'd love to hear your take. Drop a comment, share me a message, or start a conversation. And don't forget to subscribe so you never miss the bold, unfiltered strategies we drop every week. I'm Gwynberg Crury, founder and CEO of Guide2HR, where we help high growth companies scale smart with people for strategies and AI powered systems that don't just keep up, they lead. If you're building fast and want your HR to move faster, head to guide2hr.com and let's talk. And remember, scale isn't just about speed, it's about people. Until next time, have a great one.