Investors want to see character, accomplishments before they will invest in CEO

Securing an investor requires high-caliber capabilities from a CEO.

For many CEOs, getting capital is paramount to staying in business or allowing expansion, and traits that impress investors are everything. They can range from leadership qualities to background checks, with all carrying similar weight once the books have been gone over.

Marc Lederman, general partner at private equity firm NewSpring, checks the boxes in terms of tangibles like educational background and accomplishments, work experience, career progression, promotions and tenure. And then he looks for the “intangibles,” like loyalty and ability, capacity to coach and to be coached, work ethic and integrity.

“A leader must be able to excel in these areas,” Lederman told FierceCEO. “Many prospective executives have an outstanding résumé, but intangible attributes make a great leader.”

Also, a good reputation is key, Lederman said. “We use our networks to find people who know candidates or have worked with them in the past.”

Lederman also likes to see if the CEO has had any of his prior teams follow him to his current position, a sign of good teamwork and loyalty.

Rudina Seseri, founder and managing partner of Glasswing Ventures, doesn’t just want a good product idea or concept.

“We look for CEOs who love to build companies, not just products, and are able to grow as their business grows,” Seseri said. “There are two specific traits I look for: agility of execution and big ideas.”

The optimum is CEOs “that have both,” Seseri said. “But, if I had to pick one trait over another it would be execution every time. They also need to be able to pivot, course correct, in order to be able to home in and pursue the right opportunities.” 

Investors are also looking for CEOs “who meet the demands of ongoing change with nimble, engaging, and proactive management,” said Susan Gallagher, CEO, U.S. at BPI group.

They want CEOs who equip their management with the competencies and skills to achieve the organization’s strategic goals, who are able to retain top talent and “prepare executives for challenging new assignments,” Gallagher said.

Also evaluated is whether the CEO can quickly assimilate new management with teams, “enable management to powerfully lead diverse teams, and empower leaders to create and inspire high-performing teams,” Gallagher said.

Investors want to know how the CEO does with peers, especially those they have managed and the tenure of that management.

“You will want to determine how well she or he develops staff by looking at the career trajectory of those who’ve worked for and with that person,” said Doug Ringer, president of Doug Ringer Consulting.

Investors will also evaluate whether the CEO has a proven track record of success at various levels and companies and whether the CEO sacrifices longer-term for near-term rewards by asking how well the previous companies or divisions have performed in the years following the CEO’s departure, Ringer said.

Sameer Mittal, founder and managing partner of Principals Equity, wants to see “passion.” Is the CEO “passionate about the business?” Mittal said. “How vested are they in the company and product? Is this what they do as their main and only gig?”

Knowledge about the business is also key to Mittal. “Do they have the knowledge and the skill set of the products and services being offered? What is the CEO's background in similar space or area?”

Mittal also wants to know the CEO can “motivate the team. Will the CEO empower (employees) to make decisions that are necessary for growth? This isn't a hands-off task, but rather a continual connection that emphasizes the power of teamwork and the importance of accountability.”

And when it comes down to funding, will the CEO “be a good steward of capital put in by the investor. Can the CEO really grow the company and take it to the next level?” Mittal said.

So, while the investors are certainly out there, it takes much more than a business model to secure funding. The onus is on the CEO’s capabilities, track record and character.