Friday, July 12, 2024
CEOWORLD magazine - Latest - CEO Insider - 4 Things Investors Look for in Company Leaders

CEO Insider

4 Things Investors Look for in Company Leaders

As an investor, I see a lot of business plans and hear hundreds of great pitches. Contrary to what Shark Tank implies, investment decisions aren’t made in just a few minutes. Most entrepreneurs understand the importance of having all the kinks worked out of their business plans when lobbying for an investor, but too few realize how their own personal character, reputation and qualities factor into such a big decision.

Looking beyond the plans
Not every company is going to last more than a few years, regardless of how incredible a product or service may be. It’s easy for the paperwork and carefully prepared presentations to present a different story, but after evaluating companies for years, I’ve started to look beyond the plans. In many cases, it’s a long, hard look at the company’s leaders that gives us an idea of how well a business will do in the future.

  1. Reading the leadership
    As the saying goes, everything rises and falls on leadership, and this is proven time and time again in entrepreneurial ventures. Though financial troubles or a difficult market influence company success, there is much to be said about a company’s leadership and how it impacts the growth and health of an organization. Because of this influencing factor, investors look for key attributes or qualities when meeting with startups looking for capital. After all, the success of the new business impacts our success as investors. Here are four of the most sought-after qualities I look for in company leadership.

    There is something to be said about real-world experience in a particular industry that will help you succeed with your start-up. However, the more educational or formal training you have in an area, combined with hands-on experience, the better your chance of catching the eye of an investor. Longevity in the field, even if you were working for someone else, shows you understand the market. Formal education reassures investors of your level of commitment, your basic understanding of operations and your teachability.

    Having an extensive background, proven experience in your field (or one that closely parallels that field), and a solid foundation of training underscore a level of competence and capable leadership investors like myself are looking for in promising opportunities. Such qualities help demonstrate that the company is in capable hands and worthy of sincere interest.

  2. Flexibility
    When company leaders are flexible, they demonstrate the ability to adapt to challenges without losing control or going into a state of panic. There are plenty of changes that lie ahead for an entrepreneur, such as market or consumer trends, labor shortages, or economic factors. With flexibility, leaders don’t get hung up on the process or the routine. There is an ability to step back and re-evaluate what needs to be done in order to move forward.

    Markets and consumer behaviors are subject to change, sometimes on a whim, and flexible leadership is what allows companies to pivot and achieve targets and growth no matter what is thrown their way. It’s an invaluable leadership trait prized by serious investors (including myself), and should never go overlooked.

  3. Self-awareness
    The sustainability of a business model depends heavily on how well leaders identify and accommodate their strengths and weaknesses. When I talk to new entrepreneurs, I don’t want them to pretend they’re someone they’re not. Admit where your weaknesses are and provide clear steps to compensate for this. Maybe you hire a marketing firm or a third-party IT agency. Being self-aware puts you ahead of the competition in learning how to address potential pitfalls.

    To investors, the ability to acknowledge and address weaknesses often demonstrates a powerful strength, showing you not only understand your shortcomings but also the importance of managing shortcomings before they work against you.

  4. Passion
    If you are just in this business for the money, I am going to find out. Passionate people have contagious enthusiasm, creative minds, and boundless energy. These are the movers and shakers of the world. These are the leaders who will deliver results, as their drive and passion will excite and empower others to join them. Engaging both employees and consumers is a recipe for success.

    Passionate leadership is not only magnetic but one of those innate qualities that can really inspire progress, growth, and innovation. Serious investors recognize this energy and consider it carefully before making a significant financial commitment.

Unless you have these four qualities going for you, there will be a harder road to securing your capital. Spend more time on your personal character than your business plan to succeed in this industry.

Written by Alexander Dillon.
Have you read?
The Stories We Tell Ourselves Make—or Break—Our Negotiations by Beth Fisher-Yoshida.
Bridging the Global Gender Gap in STEM by Pari Lennartz.
Changing the World with Entrepreneurship by Rachel Ngom.
Entrepreneurial Endeavours: How To Start Your Own Trade Business.

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CEOWORLD magazine - Latest - CEO Insider - 4 Things Investors Look for in Company Leaders
Alexander Dillon
Alexander Dillon serves as President and Managing Partner at the New York-based GenCap Management, a venture capital/private equity firm focused on deploying capital into public and private companies with high growth potential. A skilled entrepreneur and investor, Dillon utilizes his expertise in private equity, investing, and financial modeling to support startups and empower success.

Alexander Dillon is an opinion columnist for the CEOWORLD magazine. Connect with him through LinkedIn. For more information, visit the author’s website.