What investors are looking for
Updated: Nov 10, 2020
Less than 1% of investors would invest in a company with poor financial controls. Find out why and how to get fit for investment.
As you may expect private investors are currently scrutinising company finances in ways they have never done before. This requires founders to have a greater handle on their business’ finances so that they can respond to this scrutiny. Founders must understand how the company collects, manages, monitors and controls financial information if they are going to secure investment.
Investors want to see strong financial management
For companies looking to grow and secure Series A and upwards investment, it could be the difference between a ‘yes’ or a ‘no’ decision.
A recent survey by BlackLine of 760 institutional investors found that:
Nearly all (95%) investors said that clear evidence of good financial management was key to their decision making process; and
Near real-time oversight of a company's financial data is highlighted as important for investors to make well-informed decisions about a company.
In fact, financial governance is so important that less than 1% of the investors surveyed would still invest in a company with poor financial controls without taking some form of corrective action first.
So, what are the red flags that investors look out for:
Poor processes which result in poor controls and a lack of segregation of duties;
Adjustments to filed accounts or management information that often contain errors;
Consistently late filings; and
No evidence of long-term financial planning
With advances in cloud accounting and technological innovation, particularly through automation, there is now no excuse for poor visibility of financial performance. Near-time reporting is now an investor expectation that all founders will need to meet.
At GrowthBuilders, we work with our clients to build procedures which provide:
Effective controls to prevent and detect error;
Efficient processing to reduce cost;
Insight for management and investors; and
Effective stakeholder management to engender investor confidence.
We have developed the GrowthCheck which assesses how fit a company’s processes are both now and for the planned growth of the business. We benchmark their score against their peers and the target for other similar companies and we provide the Founders with a roadmap with recommendations that can be implemented in stages as the company evolves.
Get in touch now to see how fit your finances are to support your growth plans.