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Portfolio Strategy

Balance Ventures is Not a Hedge Fund

Although Balance Ventures shares many characteristics with hedge funds (e.g., performance-based incentive compensation, limited partnership legal structures, and exclusive representation of accredited investors), Balance Ventures is not a hedge fund in the traditional sense. While our target investments are not necessarily correlated with or benchmarked against stock, bond or foreign currency markets, neither do they function as "hedges" against any particular exposure in those markets.

Management "Skin in the Game"

Balance Ventures actively pursues investment opportunities where quality management is already in place at a target company. We seek to maintain for management an equity position in the company so that management is both motivated toward, and appropriately rewarded for, their actions that create value for equity shareholders. We consider it a strength of the target company's management if they already have a significant portion of their own personal wealth invested in the business.

Preparing for Contingencies

Deal structures negotiated with target companies usually include contingency provisions - in anticipation of the undesirable and unlikely event that the portfolio company underperforms - for Balance Ventures to intervene in the daily operations of the business and either to supersede the existing management team's decisions or to replace all or part of the management team. Balance Ventures, its investors, and portfolio company management wish that such intervention never happens. Therefore Balance Ventures will only intervene with the occurrence of certain negative contingencies, e.g., erosion of profitability, strategic or operational failure, or fraud, negligence, distraction, or significant incapacitation on the part of management.

Semi-Active Participation in Management

Balance Ventures does not intend to become an active participant in day-to-day operational decisions of the companies in its portfolio. The management team's job and responsibility is to make such decisions. Balance Ventures will contribute its resources to the portfolio company's financial and operational strategy and will actively work with its network of contacts to enhance the company's operations by forging relationships with new partners, suppliers, customers and, if warranted by the company's growth, new management team members.