What do Investors look for when Funding Technology Companies?

Author:

Rupert Cook

What do Investors look for when Funding Technology Companies?

Author:

Reading Time: 4 minutes

What do Investors look for when Funding Technology Companies?

Rupert Cook

Chairman at Red Penguin Ventures

Pitching to investors can be a nerve wracking game, even for some of the most seasoned entrepreneurs; competition for funding or just getting time with potential investors is high and investors are savvy when it comes to reviewing the opportunities presented to them.  There are many criteria which investors look to tick off when deciding whether they will progress and commit their time and money to a new business.

As an angel investor, I look at the four pillars of value when considering investing in a new technology company:

  • The People

The first pillar assesses the ‘people’ of a new business.

Starting at the top, it is important to have complete confidence in the CEO and weigh up whether they have the right qualities for success. Beyond the obvious importance of fierce intellect and strong work ethic, I look for three qualities in a technology entrepreneur: fearlessness, charisma and technical ability. Without charisma, fearlessness tends to turn into arrogance or recklessness and without their own technical ability they are unlikely to gain the full respect of their more technical employees, partners and customers. In just about every early stage technology company, everything that could possibly go wrong, does go wrong. Without fearlessness, the CEO is unlikely to be able to weather the inevitable tough times along the journey to success.

Looking at the wider team, I want the company to be regarded as a ‘thought leader’, which means at least one of the senior team is well known in the industry, attends and takes part in talks at events, and has authored research and whitepapers that are recognised in their field. Investors must also be able to see a sufficient balance in the team across vision, technical expertise, sales, marketing and financial management or easily identify how to fill any gaps. In addition to this, the key people must be able to work harmoniously, which often means they will have worked together before. They must also be tied in and incentivised to stay with the growing company, normally through a generous allocation of shares or share options. By ensuring they are tied in, investors know there will be stability amongst the team, which is a key factor for success, and it is much less likely they will be poached with more lucrative offers from larger rivals.

  • The Offering

Next, investors will look at the maturity of the product the investee company is offering, specifically whether there is an urgent need for the product and whether customers are willing to pay the full price for it. This includes the acid test: if the product was taken away, would the customer base suffer? Is it best in class? Is its architecture rock solid and scalable? What protection is in place- e.g. is the technology patented? We will then establish whether the product is applicable to a big enough market and whether there is a big enough gap in the chosen market for a substantial business to thrive.

  • The Base

The third pillar of value investors look for is the strength of the company’s customer and partner base. Investors will review whether the company has made inroads into a specific vertical, with an established (or at least referenceable pipeline) customer base, to which products can be sold at full price. It is here where the investee company will also have to show a solid foundation within the channel, by illustrating their contacts and relationships, to show the channel is reliable, and therefore that the company has a strong, dependable route to market.

  • The Brand

The fourth pillar is the company’s brand and whether it has successfully established itself. This means assessing its popularity and whether the brand itself resonates with the customer base as well as with partners and employees. Investors will likely take many references, so companies should make sure they’re living and projecting their values, not simply writing them on their websites.

The four pillars of value above can be assessed even before the investee company starts to make any serious revenue. For companies that are beyond the earliest stages, investors will look for the speed of revenue growth, to establish whether there is a strong demand for the product and whether the company has an effective salesforce and/or channel. This is an important element for investors and can be the trickiest for start-ups to manage. Inside sales teams are often expensive and when a business is just beginning its growth journey, can sometimes be unattainable; this is where a company such as Operatix can be hugely beneficial. By outsourcing part of the sales function to an expert in the field, companies in their early stages can really accelerate their growth and build a credible, resilient sales forecast, making them much more appealing to potential investors.

By working on their pillars of value, sourcing the right sales force and generating strong business leads, technology start-ups can get an edge over the ever-increasing competition and make themselves much more lucrative prospects in front of the right people; in this case, potential investors.

About Rupert Cook

Rupert Cook is Chairman of Red Penguin Ventures, an investment and advisory business, and Chairman of the Investment Committee & Non-Executive Director of BSC VCT PLC. He has also been a non-executive director of Operatix, since its inception.

Rupert has experienced technology businesses from every angle over the last 30 years. He was one of the founding team to build up an IT Training and Development business from scratch in the late ’80s, through to sale to a UK PLC eight years later. Since then, he has bought and sold technology businesses, carried out numerous commercial due diligence exercises, run fund-raisings for and sat on the boards of over a dozen innovative technology businesses. Rupert has built up particular experience and knowledge in the security software sector over the last seventeen years, and has more recently made angel investments both in the US and the UK, including six in cybersecurity companies.

Rupert is the author of two published business books and a frequent public speaker on Technology Company Growth and Value Realisation.

About Operatix

Operatix is a Sales Acceleration company specialized in supporting B2B Software vendors to identify new revenue streams, increase qualified sales pipeline, and accelerate channel development across Europe and North America. Operatix has a wealth of experience in working with the biggest tech players worldwide as well as a multitude of emerging software vendors.

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Channel Transformation

Digital transformation is changing how companies buy and use business solutions, making vendors re-assess the capabilities of their channel ecosystem. With channel dynamics in constant flux, vendors need to be ready to cut ties with partners that don’t share their vision or have connections with the right B2B buyers.

 

Operatix has supported numerous vendors in their path to Channel transformation by assessing current partners and recruiting new partners that are more aligned with their new channel strategy. Once the right partners have been identified, Operatix built scalable outbound sales development programs that accelerated their routes to market.

Inbound Response Management

In a competitive industry like technology every lead counts. Operatix can help you maximize conversion from MQL to SQL and from lead to pipeline, increasing both your revenue and ROI on marketing activities.

Account Identification

Identifying the accounts that are more likely to buy from you is part of our expertise. We will research the market, identify verticals and industries that can benefit from your solution and set up qualified sales engagements for your teams to kick-off the sales process. 

Cold Prospecting

Our team will identify new sales opportunities within the strategic accounts that you haven’t been successful in penetrating through your sales & marketing efforts. By applying the ‘Challenger Sale’ methodology we use a tailored, multitouch approach to connect with prospects, generating qualified sales engagements for your team and ultimately increasing your pipeline.

Outbound Sales Development

Using a proactive outbound sales approach has been proven to be one of the most effective methods to engage with prospective customers. By applying the ‘Challenger Sale’ methodology we use a tailored, human approach to getting in touch with prospects to increase your qualified sales engagements and ultimately generate more pipeline.

Outbound Sales Development

Using a proactive outbound sales approach has been proven to be one of the most effective methods to engage with prospective customers. By applying the ‘Challenger Sale’ methodology we use a tailored, human approach to getting in touch with prospects to increase your qualified sales engagements and ultimately generate more pipeline.

Partner Concierge Service

Our Partner Concierge Service helps vendors accelerate their channel programs, by engaging and nurturing channel partners and supporting them to get to revenue quicker.

Demand Generation

Whether you need to implement a demand generation strategy or get more results out of your existing demand gen engine, Operatix can work alongside your marketing team to yield better results out of your demand generation programs.

Account-based Marketing

An Account-based Marketing strategy is only as successful as the revenue it generates. At Operatix we will support your 1:1, 1:few or 1:many approach to get your team in front of decision makers in the accounts that matter the most to you. 

Lead Qualification

If your marketing leads aren’t converting, it might be a lead qualification issue. Operatix can help sieve through leads that need further qualification, so they are ready for an AE or sales team member to engage with.

Account-based Selling

At Operatix we will support your 1:1, 1:few or 1:many approach to get your team in front of decision makers in the accounts that matter the most to you. 

Pipeline Generation

Generating Pipeline for our clients is our key-objective. And we do that by using a multi-touch, multi-channel approach to generate qualified sales engagements for our customers’ sales teams.   

Account Intelligence / Deep Dive

Understanding buying centres, hierarchies and relevant personas in strategic accounts is a fundamental step to increase conversion rates. By leveraging account intelligence in a sales conversation your team can tailor their message and provide value to their prospective customer. But sales & marketing teams often struggle to dedicate time and resources to do the deep research and this is where Operatix can help.

DMID – Decision Maker Identification

Finding quality data is an on-going challenge for B2B Tech vendors. The accuracy of data platforms is questionable and that is why Operatix developed a manual process to identify & verify contact details for decision makers within strategic target accounts.

Playbook design

Operatix can develop Sales Playbooks that enable teams to sell more effectively. Your Playbook will be fundamental to get your messaging right, accurately position your solution against competitors, and adapt the communication of your value proposition to different buyer personas.

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Sales Playbook Development

Operatix can develop Sales Playbooks that enable teams to sell more effectively. Your Playbook will be fundamental to implementing the correct messaging, accurately position your solution against competitors, and adapting the communication of your value proposition to different buyer personas.

Lead Qualification

If your leads aren’t converting, it might be a lead qualification issue. Operatix can help filter through leads that need further qualification, ensuring that they’re ready for an AE or sales team member to engage with and progress through the funnel. 

Partner Portal / Marketing Concierge Service

Vendors often spend thousands of dollars building multifunctional Partner Portals to help channel partners educate their teams, manage opportunities, and create marketing programs. Still, these portals are often underutilized due to lack of bandwidth and capacity from vendors to offer support in enabling their partner community. Operatix, through their Partner Development team, can support your partners to make the best use out of your partner portal, managing the relationship with your partners and helping them set up co-marketing campaigns to drive more revenue for both businesses. 

Marketing & Sales Alignment

The sales development function is often seen as the “glue” that brings sales & marketing teams together. By working as an extension of your teams, Operatix will be your predictable source of pipeline, sales & revenue.

Optimization of MDF

Market Development Funds are an important component of any channel ecosystem, though vendors believe they are not maximizing the return on investment they should be getting from their MDF programs. At Operatix, we build scalable outbound sales development programs that will give you the visibility of return over the invested spend and will provide clear value for your channel partners.

Increase Partner Productivity

The 80/20 rule is still very applicable to the channel, which means that investing in partner productivity should be a priority for vendors looking to grow their businesses. Operatix can increase partner productivity and shorten sales cycles, by identifying ready to engage sales opportunities for your most valued channel partners.

Virtual Channel Account managers

Our VCAM team is responsible for building, maintaining, and managing sound relationships with current and prospective channel partners. They can get involved in opening up new sales conversations as well as closing small businesses up to $ 10k.

Tier 1 & Tier 2 Activation

Whether your business decided for a Tier 1 or Tier 2 distribution model, Operatix can help your channel partners get to revenue quicker. By providing qualified sales engagements to your channel partners we can accelerate your route to market with tangible and easily measurable results.

Solution Selling Training

Far too often vendors insist on enabling their channel partners to talk about features and technical details of their solutions. Customers don’t buy features; they buy the benefits your solution can bring. Operatix will work with your partner community to train them in articulating your message from a high-level business perspective, enabling them to talk to prospects about the value your solution can bring to their company from a board-level perspective.

Channel Enablement

Enabling your channel partners have measurable wins for your business when done right. Operatix has a proven track record in enabling channel partners from a sales & marketing perspective, providing them the knowledge and tools to successfully pitch your solution and sell the value & benefits of it. 

Partner Recruitment

Recruiting the right Channel Partners is the first step for a successful channel program. Operatix has helped over 350 B2B Software vendors recruit suitable channel partners across EMEA and North America, supporting them to scale and expand their presence in different geographies and verticals. 

Risk/Reward Business Model

To truly work as an extension of our client’s sales & marketing teams, we have also adapted our business models to show how our clients operate, and how their success is measured. With our risk/reward business model your investment is proportional to the results our team delivers.

Sales Qualified Leads

On average, 52.5% of the sales engagements set up by our team progress into a next step in the sale process. That means that 5 out of 10 meetings will progress either into a POC, a Demo or a pipeline opportunity.

Geographical Scale

Trading in different geographical markets not only requires a knowledge of the native language, local rules & policies, but a deeper understanding of the local culture and habits. We have the ability to deliver campaigns in multiple countries with flexible resource allocation. This is through our team of international speakers, who have the ability to sell in 17 different languages across the globe.

Increase Revenue & Decrease Cost

Building an internal sales development team comes with many additional costs and challenges that aren’t always taken into account: recruiting resources, training and enabling them etc. You also need to take into account the need for having the data and tools to make them successful, which in turn requires time, capital and effort. By outsourcing your sales development to Operatix you will see your revenue increasing, while decreasing costs and business risk.

Predictable Pipeline Generation

On average, our clients see a 26X ROI on the programs we deliver. By understanding your revenue targets and sales pipeline gap, we will work on a sales & marketing plan that will deliver tangible results.

Vertical Growth

Entering new industries or launching new product lines? Operatix can accelerate your growth by supporting your go-to-market strategy, and getting your sales teams in front of decision makers in key target accounts.

Reduce Headcount

By outsourcing your sales development and partner programs to Operatix; we reduce headcount and the challenges that come with managing people, technologies, and processes. We take care of your sales development, so you can focus on what matters the most: growing your business.

Revenue Acceleration

Operatix helps your business get to revenue quicker. By providing qualified sales engagements for your direct sales team (to kick-off new sales cycles), or by accelerating the growth of your channel partners, our focus remains on delivering tangible results for your business. 

Persona-based Selling

Operatix team will design specifically tailored messages to influence the different levels of decision makers in the sales process, tailoring the communication according to each job function. Our focus is to sell the value of your solution from a business perspective, not its features.    

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