Preparing for Private Equity or VC Investment: What Investors Really Look For

Mindset first: raise from strength, not hope

PE and VC firms buy growth, quality and control. Show traction with clean numbers, a credible plan, and a team that can deliver. Anything fuzzy becomes a discount or a no.

What investors really look for (the big six)

• Compelling narrative: big problem, credible wedge, defendable edge.

• Quality of earnings: recurring/repeatable revenue, margin discipline, low churn.

• Unit economics: CAC payback, LTV/CAC, contribution margin, cohort retention.

• Scalable operating model: SOPs, KPIs, leadership bench, S&OP cadence.

• Governance & compliance: board quality, policies, risk controls proportionate to stage.

Use of funds: clear milestones, sensible capital stack, path to next value inflection.

The readiness checklist

Story & deck

• Problem → solution → market → traction → economics → GTM → team → plan → ask.
• Proof stacked: cohorts, case studies, lighthouse customers, pipeline health.

Numbers & evidence

• Historical P&L and cash flow; 24 month forecast with assumptions.

• Cohort analysis; gross margin waterfall; churn reasons; expansion.
• Sales metrics by stage; inventory/working capital where relevant.

Data room (clean & current)

• Corporate: articles, cap table, options, IP assignments.

• Financial: historicals, forecast model, budgets, management accounts.

• Legal/commercial: key contracts, supplier terms, licences.

• People: org chart, contracts, policies, handbooks.

• Product/tech: architecture, roadmap, security posture.

Quality of Earnings (if applicable): independent review or readiness.

Governance & risk

• Board composition and cadence; minutes; decision log.

• Policies proportionate to stage (info security, data, whistleblowing, DEI, ESG where relevant).

Insurance and compliance registers.

The 12-Week Investor Prep Plan

Weeks 1–2: narrative + metrics audit; gaps list; assign owners.
Weeks 3–4: deck v1; model with base/low/high; start data room.
Weeks 5–6: management presentation; red team Q&A; customer references ready.
Weeks 7–8: shortlist 30–50 targets (fit, cheque size, track record); warm intros.
Weeks 9–10: first meetings; iterate; soft circle anchors.
Weeks 11–12: term sheet negotiation; diligence readiness; legal counsel engaged.

Understand terms (at a high level)

• Economics: valuation, options pool, liquidation preference, participation, anti dilution.

• Control: board seats, consent rights, information rights.

Incentives: management incentive plan (MIP), vesting, performance hurdles.
Seek professional legal/financial advice before signing anything.

UK note

Schemes, thresholds and regulations change regularly (SEIS/EIS, R&D, investor tax treatment, listing rules, etc.). Always confirm current rules with qualified advisers before marketing eligibility or structuring a round.

Use AI as your investment analyst

• Draft deck narratives, risk registers, and diligence checklists.

• Summarise meeting notes; generate follow up emails and FAQs.

• Build scenario models from your assumptions; you verify with finance.

Common pitfalls

Messy data room, inconsistent numbers, weak leadership bench, unclear use of funds, unrealistic forecasts, complex cap tables, defensive communication.