What Investors Look at Before They Look at Your Numbers
Originally published in the Talent Gateway newsletter.
The question that derails deals
There’s a moment in many investment processes that founders don’t see coming.
The numbers are strong. The growth story is compelling. The founder is articulate and credible. And then someone on the other side of the table asks a question — quiet, almost conversational — that the founder hasn’t prepared for.
Something like: if you stepped back from the business for six months, who would run it?
Or: which members of your leadership team could operate without you in the room?
Or simply: what happens to this business if you get hit by a bus?
It’s not a trick question. It’s one of the most important questions an investor can ask. And the founders who answer it badly — who hesitate, or who give an answer that doesn’t quite hold up — have handed over a significant piece of negotiating leverage without realising it.
The problem almost never starts in the due diligence room. It starts much earlier, in the years before anyone was asking.
What investors are actually looking for
Most founders assume investor scrutiny on the people side means: do you have good people? It’s a reasonable assumption. It’s also incomplete.
What institutional investors are really asking is something more specific. They’re trying to understand whether this business can scale and perform without being entirely dependent on one or two people — usually the founder. Whether there’s a plan, not just a team. Whether the leadership infrastructure exists to support the next stage, not just the current one.
There are five dimensions where I see this scrutiny land most often.
One: founder dependency
How much of the business runs through you personally? Not just the decisions — the relationships, the institutional knowledge, the things that only work because you’re the one doing them.
A business with a strong product and a compelling market can still be uninvestable if the answer to this question is ‘almost everything.’ It’s not a reflection on the founder’s ability. It’s a structural risk. Investors are buying future performance, not past performance — and a business that depends entirely on one person is a fragile investment.
The founders who navigate this well have usually already done the work of building the team around them, creating documented processes, and being honest with themselves about which things genuinely need them and which things they’ve just never let go of.
Two: leadership team depth
Can the people directly beneath you actually lead — or do they manage tasks and escalate decisions?
This is a harder question than it sounds. Many businesses at the 20–50 person stage have people in senior titles who are, in practice, still operating at a level below what the title suggests. Not because they’re not capable — often because the business has grown around them faster than their role has been redefined.
Investors want to see a leadership team that can make decisions, hold accountability, and develop the people beneath them. Not a group of talented individuals who are good at their specific function but haven’t been built into a team.
Three: clarity of roles and ownership
I sat with a senior leadership team recently — six people, three of them with over a decade in the business. On paper they looked like a strong, experienced team. In practice, nobody was quite sure who owned what. Things got done twice or not at all. Frustration was building quietly beneath the surface.
This is extraordinarily common at the growth stage. The business scales faster than the structure does, and the people inside it adapt by doing whatever needs doing — which works, until it doesn’t.
Investors notice this quickly. Not because they’re looking for a perfect org chart, but because ambiguity about ownership is a reliable predictor of execution problems at the next stage. If nobody is quite sure who’s responsible for something now, that problem compounds when the business is twice the size.
Four: a talent plan, not just a headcount
Most businesses have a hiring plan. Far fewer have a talent plan — a considered answer to the question of what the business actually needs from its people over the next two to three years, how it will attract and keep those people, and what happens when it doesn’t.
An investor thinking about putting money into a business is implicitly also thinking about the people that money will need to work through. If the answer to ‘what’s your talent strategy?’ is a list of open roles, that’s not a strategy. It’s a wish list.
The businesses that answer this question well have usually been deliberate about it — worked through their EVP, thought about which roles are business-critical, have an honest view of their current team’s capability versus where they need to get to.
Five: culture that can scale
Culture is the hardest of the five to articulate and the easiest to dismiss as soft. Investors don’t dismiss it.
What they’re looking for isn’t a values statement on a wall. They want to understand whether the way this business operates — the real norms, not the stated ones — will survive being 3x the current size. Whether the things that make it work now will translate, or whether they’re entirely dependent on the founder’s personal influence holding everything together.
A culture that can scale has been made somewhat explicit — people can describe it, and more importantly, they can describe what it isn’t. The businesses where culture is just ‘vibes’ tend to fragment under growth pressure in ways that are expensive and slow to fix.
The case for finding out now
None of this is terminal if you find it now. All of it is more difficult to fix under the pressure of a live process.
Due diligence is a bad time to discover you have a significant founder dependency problem. Or that your leadership team, for all their talent, hasn’t been built into something that can operate without you. Or that your talent plan is a spreadsheet of headcount targets rather than a considered strategy.
The founders who come through investment processes well are almost never the ones who’ve been lucky. They’re the ones who started asking these questions early — who did the diagnostic work, faced what it showed them, and built the things that needed building before the pressure hit.
That work takes time. Which is exactly why the right time to start is now, not when someone is asking the questions across a table.
If you’re thinking about investment or exit in the next few years, the Investment Readiness Assessment benchmarks your business across all five dimensions. It takes five minutes and gives you an honest picture of where you stand before anyone else is looking. talentgateway.net/investment-readiness-assessment
Nici
P.S. Next week I’m going to write about the one people decision that trips up almost every founder going through a growth transition — and why the obvious answer is usually the wrong one.