Print   RSS

Attracting the Right Investors with a Well-Organized Business

Making a smooth multi-million dollar exit has been a long time staple of the tech industry.

Mary Ann Keeling

December 16, 2014

	1.0/5.0 (1 votes total)
	Rate: Select 1 - Terrible 2 - Poor 3 - Average 4 - Good 5 - Outstanding

Making a smooth multi-million dollar exit has been a long time staple of the tech industry. The blockbuster formula seems to be to come up with a cool idea, to get that early round of VC money to set the bar, then to wait around for the big buyout when you can press the eject button and land comfortably on your private yacht which is docked at the island you’re about to buy. With Facebook’s 2 billion dollar acquisition of Oculus still fresh in the minds of many entrepreneurs, they’re wondering how to properly primp their business to make it a prime candidate for an eventual sale to investors and to get the best multiples while doing so. In other words, entrepreneurs are turning online businesses into virtually endless piles of money and organization is at the core of that.

Processes and Systems

Buyers are much more comfortable taking over a business when they know that there won’t be any interruptions. Of course, they’ll have ideas of ways to streamline and improve certain things, but having your processes really well thought-out and documented takes away some of the mystery. They don’t have to worry and wonder about whether or not the entire business will shut down if a few employees leave, since the processes is all mapped out and ready for them to takeover.

Depending on the type of business, this can be something that’s very simple or very complex. Processes show that you have put thought into the business and taken steps to optimize things, they show that the business has grown and learned from mistakes. Certain investors are looking for a business that has a lot of potential and room for improvement, but that’s not an excuse to neglect putting efficient systems in place to maximize productivity.

Organization

To start with, keep a clean database of your conference calls, meeting minutes and other important discussions. The easiest way is generally to record them, and then to have a 3rd party handle the transcription. This is typically the most cost-effective way to do this. Turning the audio into text with transcription also makes it searchable. Potential investors will appreciate being able to take a candid peek into the day-to-day and the culture.

Obviously, the books need to be up to date. Many founders and startups don’t know their real numbers, and that can be very embarrassing when you’re meeting with investors. Make sure that your projections also make sense and that they can hold up to scrutiny. Investors know finance like the back of their hands, so don’t get caught with your pants down when the talk turns to the numbers.

Vision

Sometimes, you’ve got to peek up from the VR headset and really define the vision of a company. Some believe that this should be very down to earth and technical, whereas others take a more artistic and pie-in-the-sky approach. There’s room for a bit of both. In any creative and forward-pushing field, an artistic vision is essential. On the other hand, the responsibility of a business is to ensure that’s even possible.

This gives potential investors an easy way to absorb and understand the culture of the business. It’s a chance to put your best foot forward and to prove that you have a realistic understanding of your field, what’s possible and what you’re going to accomplish.

Final Thoughts

Most importantly, you want to be honest and upfront with investors. There are many examples of investors passing on a business but following up with the founders for future projects because they liked them so much. Also, there are plenty of examples of companies being bought out simply because their staff are so talented and well-trained, and organization plays a vital role in that. 

Image credit: Lumaxart/Flickr

 Feedback   Submit Article