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    Want to attract investors? Solve these 3 HR hurdles

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    Wondering how to attract investors to your business?

    It takes more than promising financials and a well-crafted pitch. You must also demonstrate operational credibility to prove that your company is ready to maximize their investment dollars.

    While getting your human resources (HR) functions in order generally might not be top of mind when seeking outside investment, it can play a major role in getting you a deal.

    Having a well-established HR infrastructure helps show your company is ready to grow.

    With that in mind, here are the top three HR hurdles you should be ready to overcome if you want to attract investors.

    1. Leadership alignment

    When performing their due diligence, one of the first things investors will look at beyond the financials is your leadership team.

    As they look inside your organization, they’ll hope to see that you have a leadership team that emulates the corporate vision and has the acumen to execute the strategies they’re buying into as an operating partner.

    After conducting executive interviews, investors can quickly uncover misalignment between what that shared vision is supposed to be and what the current leadership team seems ready to support.

    For most investors, having a misaligned management team is often too risky.

    If there’s a breakdown between the goals of the investment group and the goals of an organization’s C-suite, that can trickle down through the company. Ultimately, this may prevent the business from moving in the direction the investors have deemed to be most profitable.

    In this case, investors are usually only willing to proceed if they can replace the current management team with their own proven leaders – people they can trust to act as intermediaries from the equity firm to the investment opportunity.

    If you’re pursuing or preparing to seek outside investment:

    • Has your entire leadership team been involved in the process?
    • Is everyone on board with it?
    • What do you need to do to gain internal buy-in?

    Involving all your internal stakeholders early on will help demonstrate unity and alignment if things move forward with an investor.

    Do you have work to do in this area? Here are a few key questions that can help you determine what’s behind ineffective leadership.

    2. Company culture

    What kind of company culture do you have? Your answer matters more to potential investors than you may realize.

    Company culture is a critical HR aspect to attracting investors because they aren’t just buying into your business or your leadership team. Essentially, they’re also buying into your employees. And it’s these employees who are supposed to execute on your business strategy.

    The way your people feel about their leaders and the company’s vision has a significant impact on the future of your organization.

    In top-performing companies, employees are engaged and willing to give discretionary effort when needed to help the organization succeed.

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