What does Maven look for when assessing a business?

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Venture capital (VC) investment plays a crucial role in fuelling the growth and success of innovative startups and high-potential businesses. In order to stand out from the crowd and secure VC funding, businesses need to demonstrate certain attributes that align with the expectations and goals of venture capitalists such as Maven. James Darlington, Investment Director at Maven, outlines what he believes are some key attributes that emerging businesses should possess to attract external investment.

Published: Oct 06, 2023
Focus: Insights

1.    Strong Market Potential

One of the primary factors that is considered is the market potential of a business. Venture capital is aimed at start ups and early stage businesses with little to no operating history, therefore it is important for an investor that the company in question operates within a sector with high growth prospects and substantial market opportunities. Therefore, businesses should conduct thorough market research to demonstrate a deep understanding of their target market and articulate a compelling vision for capturing market share. Demonstrating a sizable and growing total addressable market (TAM) helps instil confidence in investors regarding the long-term growth prospects of the business.

2.    Scalable Business Model

Prospective investors also look for businesses with a scalable model that have the potential to achieve rapid and exponential growth. A scalable business model ensures that increasing revenues don't come at a proportional increase in costs, allowing for substantial profit margins. Early stage companies should be able to demonstrate how their product or service can scale efficiently and sustainably, which is often achieved through technology-driven solutions, automation, or leveraging network effects.

3.    Differentiated Value Proposition

To attract growth / development capital, businesses must offer a unique value proposition that sets them apart from competitors. A strong differentiator can be a disruptive technology, a novel approach to solving a problem, a superior product or service, or a highly innovative business model. Investors tend to be attracted to businesses that can disrupt existing markets or create new ones, as this increases the chances of capturing significant market share and achieving a competitive advantage.

4.    Traction and Milestones

Evidence and corroboration of progress and traction is vital, such as revenue growth, customer acquisition, partnerships, or significant milestones achieved. Demonstrating early market validation, a growing customer base, or securing strategic partnerships helps build credibility and indicates that the business is on the right track. Meeting or exceeding key performance indicators and achieving milestones within the projected timeline showcases the company's execution capabilities and enhances its attractiveness to investors.

5.    Exceptional Team

Last but certainly not least, one of the most important attributes any business can boast is a balanced, experienced and motivated management team. Private Equity firms like Maven doesn’t only invest in ideas but also in the people behind them. A strong and capable team with relevant expertise, industry experience, and a track record of success is crucial. When identifying a potential opportunity, an investor would have to get wholly comfortable on management team's ability to execute the business plan, navigate challenges, and adapt to changing market conditions. Having a well-rounded team with complementary skills and a shared vision inspires confidence and increases the likelihood of attracting investment. 

While securing investment into earlier stage companies can be challenging, possessing certain key attributes significantly increases a business' chances of attracting investors. By focusing on the attributes discussed, entrepreneurs can position their businesses as attractive investment opportunities, fuelling growth and taking their ventures to new heights. It is also worthy to note that successful fundraising often requires persistence, resilience, and the ability to effectively communicate the company’s value proposition to potential investors.

Maven is an experienced Private Equity investor across a range of sectors, we have a strong team of investment professionals with the expertise to help businesses achieve their strategic goals and maximise growth potential. If you would like to discuss whether PE is right for your business, or for the business you advise, then please get in touch with one of our investment team at funding@mavencp.com.

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