If you’re raising funds for your business there are a few important questions that a Growth Capital investor will ask. Failure to have rational answers will decrease the chances of a second interview, and the likelihood of the company getting funded.
Sonia from BOOST&Co has helped SME’s raise growth capital for 20 years. These are some of the questions she will ask a management team and how she expects them to answer. Simple as they may sound, many businesses struggle with these questions.
How to impress Growth Capital investors at your first meeting
Q1. What is unique about your business?
Here I would expect management teams to describe to me succinctly what’s different about their business compared to their competitors. I don’t believe many businesses are unique, but everybody should be able to articulate what their differences are. It could be the product; it could be the operational side of things, the route to market or even the delivery.
Q2. Tell me about the management team?
Here I want to see that I’m dealing with a team and not just an individual who is trying to do everything themselves. The team should consist of like-minded, ambitious individuals who are all contributing and recognise the value that they all bring. It is also great when they are using external resources such as non-execs and other individuals as the need arises. I want to feel that I’m backing a team who will work well together when the unexpected happens.
Q3. How will you stay ahead of your competition?
This is about recognising that although you’re raising money and you’re growing and developing, it’s likely that your competitors are too – and maybe even faster than you. How are you going to ensure that you stay one step ahead? How are you going to ensure you maintain whatever advantage you have now, into the future as well? I expect management teams to be able to demonstrate that they are thinking about the changing competitive dynamic as well as the changes going on in their own business.
Q4. How are you going to spend the money?
A management team should be able to articulate clearly what growth capital is going to be used for and what impact it will have on the growth of their business. There should be tangible evidence that the money being spent that way will deliver the results that they are forecasting.
Q5. What keeps you awake at night?
This question is to identify what worries a management team. This will help me understand the real risks in the plan. There are no plans that don’t have a risk. You have to be able to identify the risks, address them and then minimise them.
Q6. What will you do if your business doesn’t grow as fast as you plan?
Most, if not all entrepreneurs are optimistic by nature and will believe their projections to be achievable. We want to believe that too but want to know that you have a back up plan or two of what actions you will take if it doesn’t turn out to be quite as you forecast.
Q7. What are your ambitions for the business?
This demonstrates what they personally want to achieve, what they want the business to achieve and how that correlates with their deck. This gives us an idea of their personal drivers. In the initial meeting, it’s all about belief. The most important sentiment to leave your investor with is having them want to back you and want to believe that you are the sort of team that can identify opportunities & risks, adapt and modify the business plan to achieve the overall goal.