Extensive report released on impact of talent capital on investment trends
Nine in ten investors put the quality of a venture’s leadership team in the top three factors that sway their decision when investing, according to research by executive search firm Intramezzo.
The report ‘Talent Capital for VC & CVC Investors’ is based on a survey of more than 100 fund managers from around the globe.
It suggests finding talent is a barrier to growth for 81% of global investors. In addition it reveals that 90% of investors have experienced a failed appointment – with the large majority linking it to a 30% reduction in growth.
More than one-quarter of those polled said they frequently change the CEO of a company in the course of an investment. Overall VCs are more likely to replace board members than CVCs.
Half of VCs always or frequently replace CFOs (versus 14% of CVCs), 41% appoint non-executive directors (against 10.5% of CVCs) and 32.5% frequently appoint a new chairman (13.2% of CVCs do this).
When choosing new board members during an investment, finding candidates with the right level of skills and experience is seen as the biggest challenge.
Nine in ten of those polled said this was the biggest issue when recruiting for the C-suite. The next biggest challenges were making an appointment quickly enough (67%) and identifying skills gaps (60%).
More than half (55%) said that networks were the most effective way of making executive appointments; compared to 43% who said they preferred executive search firms.
DFJ Esprit co-founder Stuart Chapman said he looks for leaders “who can sell a story”.
“Leaders need to be able to explain why their offering is better than the rest and take the whole team with them (fellow directors, employees, investors, customers, etc.),” he said.
“And, while the leadership team is critical, given the early-stage nature of our investments, this has to be backed up by really great technology, huge market potential – otherwise we just won’t see the potential for growth that we’re looking for.”