The Six Questions Investors Are Really Asking

Successful investors look beyond the spreadsheets and try to understand the company's true and maybe latent value. Ian shares the questions that the numbers do not answer.

Picture an investor in your mind, and no doubt you see someone spending most of their time hunched over spreadsheets showing financial models, market size and forecasts.

Of course they matter, but you often hear on TV’s Shark Tank or Dragon’s Den investors talking about the people, the product, the buzz it creates in the studio as much as the inevitable inquisition of the numbers.

Experienced investors know that spreadsheets don't build companies. People do. Products do. Commercial execution does. The spreadsheet simply tells you how well they've done so far.

That's why the best investors ask a different set of questions.

They are looking for evidence that the business can deliver on its growth ambitions, beyond what the spreadsheet says.

They're trying to understand whether the company is ready for the next stage, or whether today's success is hiding a problem for tomorrow, after all investment decisions are not just based on the upside, but also risk.

We may not have been on TV’s Dragon’s Den, but we’ve been in a few of these rooms, so we got together and came up with these six questions.

1. Is this company ready to scale?

Growth has a habit of exposing weaknesses.

A business can be driven by founder intuition, survive for a bit with unclear positioning and close some early deals with inconsistent sales processes while it's relatively small.

Stress that go-to-market motion, crank up the targets, add more pipeline, more customers, more salespeople and more investment, however, and those issues become expensive.

Investors aren't simply looking for evidence of growth. They're looking for evidence that growth can continue without complexity increasinging faster than revenue.

Being "ready to scale" is about having commercial foundations that can support the next phase of the journey.

2. Can it deliver predictable growth?

A few great quarters don't necessarily make a scalable business.

Many startups enjoy success because they've found a handful of customers who love what they do.

However, investors want to know whether they know why those customers bought, and whether they can repeat it.

Is there a repeatable go-to-market engine? Does marketing consistently create demand? Can sales convert opportunities at a predictable rate? Is customer retention improving?

Predictability reduces risk, and reducing risk is one of the most valuable things a growing business can do.

3. Can the business grow beyond its founder?

High growth businesses thrive without heroics.

As I just mentioned, many startups enjoy success because of exceptional founders, and founder-led sales is often what gets a company off the ground.

The challenge comes when every important customer conversation, every commercial decision and every major opportunity still depends on one person.

However gifted they are, there are only so many hours in a day, and now those hours are spent working on the operations of the company, not the things that got the company here, like sales and innovation.

Investors aren't looking to replace founders. They're looking for confidence that the business can grow beyond them.

Processes, leadership, coaching and clear commercial ownership all help transform founder expertise into organisational capability.

4. What risks aren't visible in the numbers?

A nasty surprise can kill growth.

A sexy set of financial reports, showing everything is going up and to the right, can only tell an investor what happened yesterday, an investor will want to scratch the surface and discover what will happen tomorrow.

Weak positioning, confused messaging, poor qualification, pipeline quality, pricing issues or misalignment between sales and marketing may not appear in this quarter's board pack, but they will become tomorrow's missed targets.

The best investors spend as much time understanding how revenue is created as they do analysing how much revenue has already been generated.

5. Can this team take the business to the next stage?

What got a company here, may not get them there.

Growing from £1 million ARR to £5 million requires different skills from growing to £20 million.

Investors will, of course, be eyeballing the leadership team, but they're also looking for something less obvious: the capability of the revenue department, the sales and marketing organisation responsible for converting opportunity into sustainable growth.

Unlike revenue, profit or cash, this capability doesn't appear in their spreadsheets. It is latent value.

The strongest leadership teams aren't the ones with all the answers. They're the ones that recognise where additional experience will unlock that latent value and accelerate the next stage of growth.

As markets evolve and new challenges emerge, the question becomes whether that capability will continue to develop.

The strongest leadership teams aren't the ones with all the answers. They're the ones that recognise where additional experience will unlock the next stage of growth.

6. Where are the execution gaps?

Every business has a strategy, the proof is in the execution.

As we've said before on this blog, Mike Tyson famously observed that "everyone has a plan until they get punched in the face." Investors know the same is true of growth plans.

Investors will be looking for what happens if a punch does land, having a strategy is great, but what takes an early stage company from good to great is discipline in execution that provides this resilience.

Execution gaps rarely exist because people aren't working hard enough. More often they appear where priorities become unclear, departments become disconnected or commercial disciplines fail to keep pace with growth.

Finding those gaps early gives founders the opportunity to fix them before they become barriers to scaling.

The questions are just the start

These are the questions investors ask as they look to distinguish between businesses that can sustain growth and offer a return from those relying on early momentum and about ready to flame out.

None of these questions has a simple yes or no answer. They are prompts for discussion, reflection and, frequently, uncomfortable conversations.

If you're a founder, ask them before your investors do.

Because funding provides the fuel. Commercial execution determines how far the business flies.