Tim’s candid views on what an investor looks for from a business were welcomed by an attentive audience of 20 CFOs from Cambridge technology firms. Tim covered a range of issues, starting with what a CFO/CEO should be preparing in terms of a business plan. The key points being the importance of what the business looks like now and what it could look like in 5 years’ time. Tim spoke about analysing the market opportunities and how disruptive an impact the technology/product could be. Tim was adamant that there is no point in speculative detail, an investor wants to know the survival plan through to cash flow break even and what the really big prize looks like, not simply ‘we want to exit’.
Tim led a discussion around margins, profitability and the importance of building the right management team. The general feeling around the room was that finding great sales people remains critical for success, but this is not an easy problem to solve. Putting in place the right remuneration schemes based on sustained success is imperative. Identifying great sales leaders is fraught with difficulty. The overwhelming opinion around the table was that a CEO must have already sold a product/solution, in order to know the sales cycle and be able to set appropriate sales targets.
An investor has to challenge the business. Tim’s experience has shown that the leadership is vital, and there are two types, the ‘Founderpreneur’ and the ‘Execpreneur’. Both have their upsides, but generally, the execpreneur has had prior experience of building businesses, and is seen as a safer bet from an investor point of view. That said, the importance of a great founder cannot be underestimated, and should always be accommodated where possible, most likely in a CTO capacity.
Discussion covered a wide range of other topics, from the optimal number of investors, what investment to seek, dilution, and ensuring the management team remains sufficiently motivated, to looking after the staff with an appropriate share pool. The role of venture debt was covered, as was crowd funding (you get the cash but not the expertise of a professional investor) and corporate venturing – topics that seem to remain on a CFO’s list of funding options. Funding is available, but the proposition has to be strong, as does the management team. You can have a great management team with just an idea and attract investment, but you can’t have a great product/technology with a weak team behind it.
The CFO Dinner took place on 12 June at Hotel du Vin, Cambridge and was attended by 20 CFOs from a range of Cambridge technology companies. The event was sponsored by Deloitte, Taylor Vinters & Silicon Valley Bank.
Bailey Fisher Executive Search also hosts a series of topical roundtable discussion events for CEOs and for Chairmen/NEDs & investors. For more information on our events please contact firstname.lastname@example.org
About Bailey Fisher Executive Search
Bailey Fisher Executive Search is an independent executive search firm specialising in the technology sector. Founded in 1998, the company operates internationally from offices in Cambridge and London. www.baileyfisher.com
About New Wave Ventures
New Wave Ventures is a privately-held fund seeking opportunities to invest in companies with significant growth potential, with target initial investment of £0.5m to £2m. www.nwventures.co.uk