Series | Insights into corporate finance
Why investor readiness is not determined by the business model, but by the financial clarity of a company
In many companies, investor readiness is primarily associated with a convincing business model.
The assumption is obvious:
If the market, product and growth prospects are right, it should be possible to find an investor.
In practice, however, the picture is different.
Whether a company is perceived as investable is often not determined by its business model – but by the quality of its financial structure.
Investors view a company from a financial perspective. They must be able to understand how the company will develop, what assumptions the planning is based on and how reliable these assumptions are.
This is precisely where uncertainties arise in many cases.
Figures are available, but are not prepared consistently. Plans exist, but are not fully derived. Correlations between growth, investment requirements and capital structure remain unclear.
This does not provide investors with a reliable overall picture.
And without a reliable overall picture, there is no trust.
Investor readiness therefore does not just mean having an attractive business model. The decisive factor is whether the economic situation of a company can be presented in a comprehensible and structured manner.
This includes in particular:
– a consistent presentation of earnings and liquidity
– reliable and comprehensible planning calculations
– a clear derivation of capital requirements and use of funds
– as well as placing the figures in a strategic context
These factors determine whether investors classify a company as investable – or whether processes lose momentum at an early stage.
In practice, it has been shown that
companies with a clearly structured financial presentation are understood much more quickly – and valued much more soundly.
Financial structure is therefore not a side issue.
It is the basis for investor capability.