There are multiple ways a technology company can grow.
Organic growth through a constant demand for its goods or services is one way. After all, with Industry 4.0., or the fourth industrial revolution making its presence increasingly felt, the demand for technology, digital channels and enterprise software across all sectors is increasing.
Another way a technology company might look to grow is through outside investment. Such funds will usually provide a quick boost of capital, providing the funding to allow a firm to reach the next stage of its growth.
It is important to underline here that a firm looking for outside investment is not in trouble; indeed, they are usually incredibly financially secure.
The outside capital injection is usually needed to allow it to reach the next stage of a usually ambitious growth plan.
If you are the director of a firm looking for outside investment, such as by partnering with a family office or a private equity investor, there are many important things you will need to do to ensure your firm passes muster as an attractive investment opportunity.
After all, no-one will blindly hand over investment funds without carrying out a thorough due diligence checklist – and without preparing for this, any chances of securing outside investment will be limited.
Indeed, a firm might be intensely profitable with a golden future ahead of it, but if the preparation for outside investment isn’t done properly, many investors will simply turn away.
Different investors look for different things. The list can potentially be endless and can be very sector specific. However, there are some things that all will want to see. Therefore, let’s concentrate on the core things that all investors will look for to ensure a technology company presents itself as an attractive opportunity.
Facts, figures, and forecasts
One of the most important things that any potential investor will want to see will be a financial statement. It will usually include the past financial performance, full balance sheets, current trading figures, profit and loss statements, cash flow and financial risks.
The key thing to remember is that these figures, whether presented as an executive summary to start with, or as a full, detailed breakdown, will need to be watertight. You can expect any investor to get his or her own accountants and legal teams to effectively carry out an audit to ensure they are accurate.
Hand in hand with this financial statement should go the growth strategy. The past and current performance of a firm is just one aspect. An investor will also want to see where the growth opportunities lie, to ensure that any investment made is likely to be returned – with a healthy profit.
A full business overview
A full rundown of the business will need to be prepared. If it is a business that has changed hands a few times, or one with a lengthy history, then be prepared to do a lot of research – if you are looking for investment in your technology business, you will need all the important facts at your fingertips.
This overview should contain a full history of the business, a list of all significant personnel over the years, the purpose of the business, the products and services offered and the market in which it operates. You will also need to know your competitors, what their market share is compared to yours, and present a full analysis of any similarities or differences that you have to them.
Customer insights
It is essential to demonstrate that you know your customers. You will need to show who they are, where they are, and why they need your services. An investor will also want to see that you have spoken with them to find out what their future requirements might be, and how you can be a part of their growth strategy in the future.
ESG matters
An environmental and social governance strategy is rapidly moving from a nice-to-have to a must-have. Many outside investors will want to see evidence of any ESG activity. If this is limited, the key thing is to be honest. Do not try and “invent” something that has not happened.
Staffing
Any technology investor will want to understand the personnel structure of the business. This is where the production of an attractive hierarchy chart might come in handy. It might have a few spokes or lots of spokes, but it will clearly show who is responsible for what and how they interact.
It should also include an analysis of management positions and responsibilities, details of key personnel, such as experience and their strengths and weaknesses, and full details of the ownership structure, including any members of staff who might own shares, or have any financial interests in the business.
