All Money Is Not Created Equal

Chapter 18The Moral Contract

It's easy to be a great partner when everything's going well. The real test of a partnership is when things aren't going well. By then you're bound to each other, so hopefully you were careful and wise in choosing your partner(s).

One way we at Runway Growth Capital try to differentiate ourselves is by being seen as a strategic partner, not a commodity provider or merely the people on the other side of a transaction. That's important because we very rarely work with companies at the beginning of their financing journey, which means that our journey with a company is likely going to be shorter than a VC's. We have less time to “prove” ourselves and to get to know each other. The shorter duration of our partnership is one of the many reasons we are so careful about maintaining a good reputation and acting by the terms of what we call “the moral contract.”

This isn't to be confused with a “morals clause” – a portion of a contract that stipulates that someone is to behave in accordance with a certain agreed-upon standard of behavior, the violation of which will cause a penalty that could include the voiding of the contract. Nor is it the equivalent of what's agreed upon legally by both sides at the start of your relationship. A moral contract is one that you make with yourself and fulfill on behalf of others. I think of it as “What you do to and with your partners that allows you to sleep at night.” (I'm using “partners” loosely here, not in the legal ...