Understanding the whole value of Private Capital Investors

I have yet to meet an ambitious New Zealand business owner who has not considered Private Capital investment. While most know that this form of funding usually comes packaged with knowledge, networks and governance, few would claim to truly understand the whole value an investor brings until the right match is made. Of course, Private Capital accelerates business growth by funding expansion – be that via R&D, new products and services and/or new international markets – but the investor can be just as powerful as the capital itself. The following are three notable examples of investor impact.

1. Optimise growth with expertise and objectivity   
   Plenty of businesses owners will be familiar with Justin Goodbread’s business book entitled Your Baby is Ugly,1, this book taps into a truth about how difficult it is for passionate founders to retain their objectivity when it comes to their business. Investors add a lot of value in this regard; not only do they bring a wealth of expertise, but they also offer a fresh viewpoint. We have seen many investors find ‘a flaw in the plan’ and then work with founders to overcome it – this could be anything from a change in the pricing model to a different location for manufacturing. This level of optimisation can make all the difference when it comes to how quickly – and to what extent – businesses can achieve growth.
   
   
2. Amplify the vision and activate the strategy  
   Most founders have worked tirelessly for years to develop their business and it’s often a lonely pursuit. However, the right investor will share the founder’s vision for what the business can become. The impact of a shared vision on the founder, and the business can be wide-reaching, from enhancing internal culture to the attraction of skilled people, other investors, customers and new trade partners. When an investor shares the business vision, they’ll share it with their contacts and connections. These networks can be game changers when it comes to activating on the business strategy – particularly valuable for scaling internationally, launching new products, and hiring key leadership (e.g., a sales director in a foreign market).
   
   
3. Balance risk, gain stability and exit well 
   The role of an investor in a governance position has many benefits, including as a key sounding board and mentor to navigate risk and support the stability of the business. Investors also absorb some of the financial risk, freeing up founders to focus on long-term growth, instead of short-term survival. But in the long-term, it’s not all about growth, investors often play a big role in exit. One of the investors we work with has been through 10 start-ups and 10 exits, the value of this is immeasurable to a founder when it is their first time navigating both. Investors can be uniquely skilled to guide businesses toward successful exits through an initial public offering (IPO), acquisitions, or mergers.
     

For founders with global ambitions, the revised Active Investor Plus (AIP) visa – launched his year – has increased interest from international migrant investors. At BNZ we are pleased to connect and support both local and international investors, with ambitious New Zealand businesses.  If your business is poised for step change growth, we can help. Contact us for advice, connections and more information about BNZ Private Capital Forums.  

Any views expressed in this article are the personal views of Linda Sturgess and do not necessarily represent the views of BNZ, or its related entities. This article is solely for information purposes and is not intended to be financial advice. If you need help, please contact BNZ or your financial adviser. Neither BNZ nor any person involved in this article accepts any liability for any direct or indirect loss or damage arising out of the use of, or reliance on, all or any part of the content.