Caprae Capital Partners

The Superdeprival Bias: When Investors Chase the Loss, Not the Logic Few emotions warp financial judgment like almost winning. Superdeprival bias, coined by Charlie Munger, describes the pain of losing something that feels nearly ours. It’s not the actual loss that hurts most, but the near miss. In investing, this shows up when a deal slips away after months of diligence or another bidder surfaces late in the process. Rationally, we should reassess value. Instead, the mind reframes it as a personal loss, turning valuation models into weapons of emotional defence. We stretch price, justify terms, and tell ourselves it’s about “momentum,” “synergy,” or “relationship capital.” The danger is that proximity feels like progress. The closer a deal seems to completion, the harder it becomes to walk away. Even when logic demands it. Investors mistake sunk effort for strategic conviction, forgetting that discipline, not possession, compounds return. The antidote? Predefine walk-away thresholds before emotions escalate. Use third-party reviews or deal-killers who have no emotional equity. And remember, losing a deal isn’t losing value. Overpaying for it is. In a world obsessed with winning, the best investors master the art of letting go. #BehavioralFinance #PrivateEquity #VentureCapital #DealMaking #DecisionMaking #InvestmentStrategy

Most firms obsess over the deals they did. Few count the ones they didn’t.  In private capital, omission isn’t a footnote: it’s the invisible risk that rewrites fund trajectories.  Cambridge Associates found that <6% of venture financings drove >60% of returns. Missing just one of those outliers isn’t bad luck, it’s multiplicative risk. A “no” doesn’t just close a door; it reshapes the slope of your return curve. That’s why Bessemer Venture Partners publishes an Anti-Portfolio of Apple, Google, Tesla, Airbnb: misses that speak louder than wins. For disciplined investors, omission is not failure; it’s a ledger. At Caprae, subtraction is a strategy. By saying “no” more often, we preserve dry powder for rare asymmetries. In a power-law world, more yeses can dilute signal; more nos can sharpen it. The real question isn’t just what did you back? It’s which omissions preserved your winners, and which passes will haunt you? #VentureCapital #PrivateEquity #Investing #Leadership #RiskManagement #OpportunityCost  #CapraeDNA

Net Dollar Retention: The Real Test of Growth Quality “Growth looks glamorous. Retention pays the bills.” Most companies chase new customers. The best ones make old customers compound. Net Dollar Retention (NDR) measures how much recurring revenue you keep and grow from your existing base after churn, downgrades, and upsells. Formula: (Starting ARR + Expansion ARR − Churned ARR) ÷ Starting ARR × 100% At 100%, you’re steady. Above 100%, your revenue base expands without new logos, the purest form of compounding. Though born in SaaS, NDR’s logic applies everywhere. A bank deepening client wallet, a manufacturer with repeat orders, or a healthcare chain with returning patients; all signal the same truth: customer expansion without acquisition burn. Because real growth doesn’t shout; it repeats. And when your base grows faster than it churns, you’ve built something more than momentum. You’ve built endurance. #RevenueQuality #NetRevenueRetention #Retention #OperatingDiscipline #PrivateEquity #ValueCreation

Larry Leadgen sent 1,000 emails this week. Only 1 was "interested". And he’s still calling it a win. Because in lead generation, the real metric is staying in the game. #LeadGen #Outbound #ETA #SearchFundHumor #SaaSquatchLeads #CapraeCapital

Founder's Shadow Key person risk isn’t a vague concern, it’s a 10-25%1 valuation discount, a range cited by valuation experts like Shannon Pratt and Aswath Damodaran. Often, the penalty is worse, killing the deal entirely. If you're in the lower-middle market, your business almost certainly has it. Here’s how it plays out: Healthy companies in a sector might trade at 7-8x EBITDA, but founder-dependent ones get knocked down to 3-4x.2 Peninsula Road shared a case study on a deal with solid revenue and a great brand die in diligence for this exact reason. The two founders held every single client relationship, and the buyers walked.3 It’s a classic pattern. When the founder is the business, buyers price in the risk, not the upside. Earnouts get stretched, strategic buyers lose interest, and your options shrink. The good news is it's fixable. Start 12-24 months before an exit. Transfer key relationships to your team and let them lead the calls. Build repeatable systems for sales and operations. That $150k sales leader you hire will pay for themselves instantly in valuation recovery. It works. One SaaS founder moved from running everything to advising, systematically transferring knowledge to the team. The company closed its exit at full valuation.3 The dependency shows up everywhere (customer relationships, technical expertise, operations, strategy…) but every area has a fix. Have you seen this play out in a deal? What actually worked to fix it? #MergersAndAcquisitions #BusinessValuation #PrivateEquity #ExitPlanning #KeyPersonRisk #LowerMiddleMarket

Here’s the latest batch of graduates with notable shout outs. Really appreciate the hard work y’all have put in. Caprae is the home of the brave and bold. Feel free to come back to run it back! #CapraeCapital #PEInternships #Culture #Recruiting #BleedAndBuild #TeamCaprae

Most firms obsess over the deals they did. Few count the ones they didn’t.  In private capital, omission isn’t a footnote: it’s the invisible risk that rewrites fund trajectories.  Cambridge Associates found that <6% of venture financings drove >60% of returns. Missing just one of those outliers isn’t bad luck, it’s multiplicative risk. A “no” doesn’t just close a door; it reshapes the slope of your return curve. That’s why Bessemer Venture Partners publishes an Anti-Portfolio of Apple, Google, Tesla, Airbnb: misses that speak louder than wins. For disciplined investors, omission is not failure; it’s a ledger. At Caprae, subtraction is a strategy. By saying “no” more often, we preserve dry powder for rare asymmetries. In a power-law world, more yeses can dilute signal; more nos can sharpen it. The real question isn’t just what did you back? It’s which omissions preserved your winners, and which passes will haunt you? #VentureCapital #PrivateEquity #Investing #Leadership #RiskManagement #OpportunityCost #CapraeDNA 

When your board is thinking of firing you, but you’ve already burnt out (and your flight is in three hours). Are you team pressure or team Penguin? #SearchFunds #ETA #Burnout #CapraeCapital #BleedAndBuild

Debt Covenants & Equity Cures: Staying Out of Default Every loan agreement hides a quiet enforcer: the debt covenant. It does not make headlines, yet it decides whether a company stays solvent or slides into default. When performance falters, this clause turns from a footnote into a fire alarm. The only extinguisher left is often the equity cure. Broadly, covenants come in three types: affirmative (things you must do, such as maintaining insurance), negative (things you cannot do, such as issuing new debt or dividends), and financial covenants, which test metrics such as net leverage or interest coverage. The net leverage ratio is one of the most common and most critical measures. It is calculated as total debt minus cash, divided by EBITDA. When this ratio exceeds the agreed limit, the company is said to have breached the covenant. Such a breach often constitutes a technical default, even if the company continues to meet its payment obligations. This is where the equity cure comes in. It serves as a contractual mechanism that allows shareholders to inject fresh equity to repair a breached financial ratio and bring the company back into compliance. Illustration: Net debt = $43 million, EBITDA = $10 million. Leverage ratio = 4.3x versus a covenant of 4.0x. An injection of $3 million in equity reduces net debt to $40 million. The leverage ratio now becomes 4.0x, restoring compliance. An equity cure can fix the numbers but not the underlying performance. It is a useful tool that buys time for management to stabilize operations, but without operational recovery, it merely delays the inevitable. #PrivateEquity #LeveragedFinance #DebtCovenants #EquityCure #CapitalStructure

The 3-5x EBITDA Market Hiding in Plain Sight While everyone chases the same overheated tech deals, a $3-5B compliance-driven market is quietly operating with hundreds of founder-run businesses trading at just 3-5x EBITDA. The industry? Range Safety & Air Filtration. It’s not glamorous, but it’s a classic roll-up playbook waiting to happen: Fragmented: Dominated by local HVAC contractors with no scaled national player. Sticky Revenue: Mandated OSHA/EPA compliance drives recurring contracts for filters, testing, and audits. Non-Discretionary Spend: Demand is resilient to economic cycles because safety regulations aren't optional. For a consolidator, the opportunity for multiple arbitrage is significant. By centralizing operations and professionalizing a fragmented landscape, a scaled platform could unlock immense value. Is the next great private equity platform hiding in the market's most "boring" corners? Our latest research paper is a deep dive into the sector’s unit economics, competitive landscape, and the full roll-up strategy. 👉 Link to the full report in the comments. #PrivateEquity #SearchFunds #ETA #Rollup #MandA #IndustrialServices #CapraeCapital