When deals go sideways, it’s usually because people on either side of the table are having different conversations.
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One of my earliest mentors warned me about what he called the “sharp elbows crowd.” I didn’t fully understand what he meant at the time. I figured it was just another colorful phrase from the deal-making world. Forty-plus years later, I know exactly what he was talking about. The sharp-elbows crowd is the partner who’s always nudging for more control, cutting corners you never agreed to cut, and pushing decisions that serve their spreadsheet instead of your people. You don’t spot them in the pitch meeting. You spot them a year in, when it’s too late to walk away.
I think about that phrase often when founders tell me about deals that went sideways. Not deals that failed because the market turned or the product missed the mark. Deals failed because the people on either side of the table were never running the same race to begin with.
The piece most founders miss is that taking on a capital partner is closer to getting married than it is to closing a sale. It’s a relationship, not a transaction. And like any marriage, it works when you’re aligned on values, timelines, communication, and where you want to end up together. It breaks down when you’re not, no matter how good the paperwork looks.
Before I ever sat across from a potential equity partner for RFJ, I made myself answer three questions honestly. I still walk every founder I mentor through the same ones.
1. What am I actually trying to build?
This is the simplest one and the one people most often skip. A lifestyle business that gives me control, freedom, and steady cash flow is a completely different animal from a scalable platform I want to grow fast and eventually exit. If you don’t know which one you’re running, you can’t possibly know what kind of partner belongs alongside you. And if your partner assumes one while you assume the other, you’re already in trouble.
2. What is my timeline?
Equity funds run on a clock. If you’re talking to a firm that’s four years into a seven-year fund, they’re already thinking about exit. They have to. Meanwhile, you might be planning to run this company for another decade before you even entertain a sale. That gap doesn’t shrink over time. It grows. And it eventually becomes the thing you’re fighting about instead of the thing you’re building.
3. Can we communicate honestly, without ego, when things go wrong?
I care most about this question. Because things will go wrong. Something always does. And what you need in that moment is a partner who runs toward the problem with you, not one who retreats into silence or blame. If you can’t already sense that quality in the way they behave during the pitch, you’re not going to find it later.
The misalignment costs are real, and they compound. You can’t pivot without consensus. You can’t ride out a bad quarter without a lengthy explanation. You start defending decisions instead of making them. Meetings that should be about growth turn into meetings about trust. And every one of those conversations pulls energy away from the work that actually moves the business forward.
The strongest partnerships I’ve been part of, both as a founder and now as an investor, weren’t built on term sheets. They were built on hard conversations we had before the money changed hands. Get those conversations right on the front end, and you save yourself the far more expensive ones later.
My book, The Growth Capital Playbook: How Smart Founders Find the Right Partner, Scale Fast, and Build What Lasts, expands on these principles through the full story of building, scaling, and ultimately exiting a business while staying aligned with purpose and people.