The Digital Partner

Why Venture Services is the value-added investor
The Digital Partner
Why Venture Services is the value-added investor
Software is a core driver of enterprise value creation in today's businesses. The convergence of services and software companies, the dominance of digital commerce, the growth of software-as-a-service for every market niche, and the ongoing technology platform evolution (from mobile to AI for example) require market leading businesses to leverage software.

Across all business stages (concept, seed, series A+, growth, and enterprise), management teams are targeting investment in software to create value. While the desire is universal, execution of software-driven strategies is challenging for all but the most technical of companies.

For management teams without deep software experience, creating great software from scratch is highly challenging. Increasingly, even teams that have experience in software are still challenged with recruiting and retaining software product managers, designers and engineers due to competition for quality people in this space. As a result, execution of software-driven strategies is, in most businesses, running below expectations and limiting the true opportunity at hand.
The Digital Partner
I started my career in 1994 with a private equity firm. At the time, the PE industry was much smaller than it is today, and none of the graduates from UNC (including me) had a good understanding of this business. 23 years later, we live in a PE-owned world.

It's our belief that, in the same way that management teamed with "Capital Partners" to create value with private equity, a new generation of businesses will team with "Digital Partners" to create value with software.

Capital is no longer scarce. The world is awash with VC and PE. Digital is the new scarce resource, and companies that can access this resource will outperform companies that do not. With this thesis, we're building Castle Digital Partners as a next generation partner to management teams that need help with software-driven strategies.
The Clear Digital Opportunity
Castle Digital Partners has a simple partnership criteria: 1) proven management team; 2) solid business traction; and 3) a clear digital opportunity. With a proven team and solid business traction, the digital opportunity is the clear path to creating significant enterprise value.

As the digital partner to management, our mandate is to realize this digital opportunity by providing the scarce resource to make it all happen. Instead of simply investing capital, and then using this capital to try to hire an in-house software team or outsourced software firm, Castle Digital Partners provides a turnkey solution to the digital opportunity. We execute the digital program with our digital strategy, product management, design, and engineering team members.

This clear digital opportunity varies from company to company. It can be the creation of a new software platform, or the transformation of an existing one. It can be the introduction of mobility or AI, improvements to the user experience, or a change of business model enabled by software (from service to SaaS for example).
Thesis-driven digital programs
As experts in digital businesses and software, we help management teams shape this clear digital opportunity into a structured, thesis-driven, digital program. Every program starts with defining the thesis and the product strategy, and then we implement this strategy over the course of 12-36 months.

Because we lead and manage the execution of the program, we are in essence de-risking the digital opportunity. Not only do we bring scarce digital capabilities to the table, we also bring assured delivery of the thesis. Without technology execution risk, management can focus on sales and marketing and growing the business.
Venture Services: partnership structure
Most of the businesses that match our partnership criteria are not VC or PE funded companies. When we meet management, their first priority is to solve the clear digital opportunity that will enable their vision, so they view access to digital capabilities as equal to, or more important than, access to capital.

In our experience, non-technical management teams underestimate the true cost of enabling a software-driven strategy. Moreover, it is common for budgets to be limited due to the practicalities of running the business. It is rare that there is enough budget to afford a digital product program in full.

So, one of the most powerful aspects of the Digital Partner is the ability to finance the implementation of the program. At Castle, we have three models for financing a program. Since we do not have an investment fund, we normally offer to finance up to half of the program in exchange for an equity investment. In special cases, we can involve capital partners to fund the majority of the program. With larger businesses, where investment is not possible, we can implement a program in a fee-only relationship.

Because we have this flexible, investment-focused partnership model, we call ourselves a "Venture Services" firm.
Venture Services: Investment focus
There is so much noise in the IT services market that outsourcing is now viewed with caution. We share this same sentiment, as we get emails every day offering inexpensive outsourced software development. This is not our business.

We're a Digital Partner for management teams of software-driven businesses. Our focus is on making good investments by partnering in the right opportunities.

If you are a proven management team who can demonstrate solid business traction and a clear digital opportunity, making an investment in your business is an easy decision. We want to solve that clear digital opportunity as your Digital Partner. We want to participate in the upside of your business, and we're willing to trade our short-term fee income for this long-term opportunity.

There is so much value that can be created with software today. Let's partner to make it happen.
Castle Digital Partners
Castle is a digital partner for management teams of software-driven businesses. We team with management to envision, design, develop and operate digital platforms, products and services that drive growth, market differentiation — and ultimately enterprise value.

We are a venture services firm operating as a true partner and investor in our portfolio businesses. We focus on software-as-a-service, digital commerce, and tech-enabled services companies that have strong management, solid business traction, and a clear opportunity for digital product creation or transformation. We then partner on the execution of the digital thesis with creative deal structures involving equity investment and/or fees.

To date, we have executed over 50 digital platform programs and invested in 18 of these companies.