How Growth Equity Increases Your Company Value

When aiming to accelerate growth, entrepreneurial technology companies require not only funding, but also experience, vision and both strategic and operational support. This is where the fastest-growing form of venture capital investment, growth investing, comes in. Investing for growth is not only a financial investment, but also a catalyst to increase the value of the company by improving, developing and growing it in a versatile way.
What is growth investing?
Growth investing is a category of venture capital investments that invests minority stakes in entrepreneurial-driven companies that already have an existing business and a desire to grow. The value of the company is increased together with entrepreneurs. Investments for growth are often made by growth funds, which bring not only capital to the company, but also expertise and networks.
How does responsible growth investing increase the value of a technology company?
Below, these questions are examined from Voland's point of view.
- Creating an ownership strategy and business strategy together
First, let's outline together what kind of trip we are going on. What is the level of ambition, and within what time frame should owners expect to achieve the goals? The business strategy, in turn, tells you how to get there - the strategy determines the ladder to climb. It is outlined, in addition to organic growth, whether inorganic growth will be pursued, the market in which the company will operate, and the time frame for growth measures.
- Finding the best people for key positions
Investors often have a large network of top names from different fields, among which it is possible to find the best possible board for the company. In addition, the network has advisors and, if necessary, recruitment candidates to key positions.
- Accelerating scaling
Technology companies' business models, such as SaaS services, platforms and artificial intelligence solutions, are often very scalable. Venture capitalists provide funding to accelerate customer growth by investing in a sales team or marketing automation and improving their technological solutions. The opening of new geographic markets, i.e. internationalization, is also topical for many (section 7).
- Improving competitiveness
Growth investing helps technology companies to stay one step ahead of their competitors. Investments can be used to invest in product development, acquire top experts or buy other companies (section 8).
- Improving business processes
Growth investors bring not only money, but also business expertise and contact networks. They can help the company optimize the organization and cost structure, streamline sales processes, or open doors to significant customer relationships.
- Developing culture, management and ESG
A responsible growth investor can help improve the company's management and raise the readiness of the company culture to support growth and well-being at work. With a responsible investor, it is possible to create a dedicated responsibility program for the technology company, which will improve the company's ability to understand and manage its own ESG impacts, and meet the sustainability expectations set by customers.
- Expanding to new markets
Many technology companies face a situation where the domestic market has been filled, and the next step is internationalization. With the help of a growth investor, it is possible to maximize the likelihood of success in internationalization.
- Mergers & Acquisitions
A good growth investor has an experienced M&A team with whom the entrepreneur can make acquisitions. This allows the investor to help at every stage of the M&A process, from screenplay to negotiations and integrations.
- Building the company into an attractive exit destination
Venture capitalists have their eyes on the future: they strive for the multiplication of the company's value and an excellent exit. Of course, the majority owners of the company, that is, entrepreneurs, get to participate in this benefit. Preparing for Exit begins already with the investment, and the development of the company towards a good exit is determined work. A successful exit is not only financially rewarding, but also a sign of joint travel and work done.
For technology companies, exit often means one of the following:
- An industrial acquisitionin which a larger technology company acquires a growth company.
- Sale to the next investor. In this case, the size of the company has increased, new investors make a more ambitious plan and invest a larger amount of money in the further development and growth of the company.
- Listing on a stock exchange (IPO), where the company collects public funding.
Summary
Investing for growth is not just about providing capital – it is a strategic tool to increase the value of the company, strengthen its market position and lay the foundation for a good exit. It is good to remember that the required measures are often laborious and difficult. Therefore, they should be taken up with a private equity investor who has experience in entrepreneurship and different areas of value creation. In addition, it is important that a confidential relationship is established between the investor and the entrepreneurial group, and that the cooperation is fun and smooth. This way, everyone can not only create value together, but also enjoy the journey together!