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How to win strategic investment?

English Posts investment Uncategorized // robin // 2009-04-29 // 2 comments

altex is looking for (strategic) investment (at the right price) and I would like to share some of things I believe, and have found out, will matter to investors who look at us and other companies working in the digital space.

Even though I successfully sold my first internet marketing agency (in the UK) back in 2002, things have changed and the global recession does not help.

Here goes…

Positives
Strong historic growth curve
Profitable (preferably highly profitable)
No big debts
Reasonable staff cost to revenue ratio
Technically strong
Commitment to Research and Development (Innovation)
Scalable products
High profile name/brands
Award winner
Credibility/ strong reputation in marketplace
Wide customer base
Confirmed orders/guaranteed revenue
Best talent locked in (eg with share deals based on targets)
Creative culture
Equal levels of contribution by key players

Negatives
Poor or negative growth
No exclusive products or high profit lines
Unrealistic or unambitious goals
Poor market positioning
Highly active and successful competitors
Sheep mentality (no thought leadership in marketplace)
Dependence on one type of customer or sector
No client relationships at senior level
Lack of accountability for results
Reliance on one person
Unclear propositions

Maybe you can think of more? If yes then share them here please and I will update the list from time to time.

Disagree? Why?

PS Altex does pretty well on the above points but there are obviously some areas we could improve (hence the desire for investment to accelerate revenue growth for new products and in new markets)

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There are 2 comments .

Jüri —

Scalability, potential for huge margins, exponential growth of profitability etc are some of the keys for attracting the investment. External investors are usually not so interested in consulting companies, where productivity is linearly tied to number of people and their salaries. In consulting it is hard to get 10 or more time returns on your investment, especially if you are a VC or a professional angel. Also consulting companies are hard to exit. So a nice profitable consulting or professional services company is not very sexy as an investment object.

Because of that companies like yours seem more appropriate not for professional investors, but purely private investors from your friends and family, or just wealthy individuals. They might not be so exit-driven, willing to look more for annual dividend profits and a nice continuous stream of income.

Or, you should be very big, really big, hundreds of people instead of tens and uniqueness in some niche on world market. Baltic local small companies in most cases are not investable object anyway, just because of the size of the fishpond.

Hopefully you will get good feedback on the Connect Estonia Springboard as well and let the participants there discuss these issues and evaluate scenarious.

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Robin Gurney —

@Jüri: Great comments and absolutely right in general BUT altex does have some scalable stuff 🙂 Its not just about consulting and service. We have events, data and software too.

Also ref consulting/servicesif you look at the big (international) ad and media agencies they are worried and need to expand into digital (they are already trying) and trying to replicate altex offerings will take a long time and money. One of them might think that buying a head start and competitive advantage makes sense.

We don’t need the money for organic growth – this we manage fine alone.
We want money to accelerate growth of the more profitable and scalable elements and to launch new scalable offerings and expand to new markets.

Altex is perceived as purely an internet marketing agency but actually there is more…just not highly visible.

So we think that different elements of altex will (could) appeal to professional, private and strategic investors. Unpicking where the value lies for different investor types is what we hope the Connect Estonia event will help us with. perhaps it means spinning off daughter companies, not sure.

PS Sorry this comment did not get posted on time. Jüri you were right – Askimet spam filter got a bit over enthusiastic…

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