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How do Private Equity investors evaluate investment opportunities? The entrepreneur, the team, and existing investors (Part I)
Entrepreneur view
There are many promising entrepreneurs ranging from owners of family businesses to young entrepreneurs just starting out. Only a handful of them will attract the attention of venture capital investors or private equity. The right match between Entrepreneurs and Investors, like a giant Tinder, follows some rules:
- First of all, it is not only the investor who selects the entrepreneur and his team, but also the entrepreneur who evaluates his or her future investors.
- What will this investor bring to the business?
- Will he add value as a new member of the Board of Directors?
- Will he be able to help me accelerate my growth?
- What does his network offer?
Investor view
Investors, for their part, look at the following:
A business plan that is not supported by a talented and inspiring CEO has little chance of success. How much management experience or technical knowledge does the business leader have?
Also important in the evaluation is the management team that will implement the business plan together with the CEO. What are their individual and collective strengths? Are there gaps that still need to be filled?
Investors also evaluate the quality of the first-time shareholders and those who want to invest together with them.
At TheClubDeal
At TheClubDeal we are especially looking for entrepreneurs with the so-called “daring factor”, which means the guts to manage and grow the business even in the current difficult times.
It is also crucial that the entrepreneur is and remains focused on the existing business plan. At TheClubDeal, we once stopped a capital round when it turned out that two managers had concealed the fact that they had made substantial side investments in a completely different company. Because of this, the so-called “skin in the game” was not optimal. The trust had evaporated.
TheClubDeal likes to put its shoulders under a well-founded business plan that is also supported by sector-specialised investors.
So, are you an entrepreneur and do you recognise yourself in this description, do not hesitate to come and discuss your business plan at TheClubDeal.
