The UK's innovation agency has just released a report highlighting what investors are looking for in potential investment targets.
‘Scaling up: the investor perspective’ is the result of research commissioned by Innovate UK which was overseen and publish by the market research company, Ebiquity.
Ebiquity went out to a panel of leading British business leaders, asking them what they believed to be the characteristics of fast-growing, investable businesses and the challenges such businesses faced.
From our perspective, in terms of the work we do and the context many of our clients find themselves in, the two stand out points were…
Cultural Differences a Barrier to International Expansion
Investors see a company with global expansion plans as offering growth and security. Going global demonstrates scalability.
However, companies are finding it hard to export for many reasons including funding, regulatory and fiscal issues, culture, language and Brexit.
Interestingly, 52% of investors say cultural differences are a barrier to international expansion whereas only 33% of business agreed.
This points to a perception gap in British businesses as to how important culture is in getting business done when you are abroad. Investors on the other hand, with experience of several businesses trying to expand, acknowledge culture as a potential disruptor.
Investors Like People Skills
Soft skills are one of the most important factors for investors. They want to work with business owners and leadership level stakeholders with communication skills, ambition, passion and personal resilience.
Among the top reasons for investment deals to break down included poor communication, the inability to adapt or show resilience, lack of chemistry between parties and poor cultural fit. All point to the central important of ‘people skills.
A strong management team was identified by both investors and businesses as very important for a company to scale up successfully, with sales teams also being vital in driving growth.
The research found that investors (33%), in comparison to businesses (59%), seemed to underestimate the role of a well-trained and skilled team in achieving scale-up goals.
To find out more, have a look at the report for free here.