Whether raising a round of funding or creating shareholder wealth, companies increasingly need a well-articulated and demonstrable data and analytics strategy. Here are some things that can sway an investor’s opinion, for good or bad.
(Image: Geralt via Pixabay)
Data and analytics strategies are no longer merely nice-to-have. They’re becoming mandatory because data and analytics are changing the competitive landscape in every industry. Some Wall Street analysts and venture capitalists are keenly tuned into the top-line and bottom-line differences the use of data can make. If you’re presenting to one of these firms in hopes of getting funded or maximizing shareholder wealth, you’d better be prepared to answer some very smart questions, and be able to back up what you say.
Institutional Investor recently published a report, sponsored by KPMG, based on a survey of 260 investors and sell-side analysts. Twenty-four percent of the respondents said they changed one or more of their investment opinions based on a company’s data and analytics strategy, and 45% expect that to be the case in the next two years.
“The [companies] that have been using analytics for years are farther along, but one by one they’re getting it, and I’ll call it the competitive advantage or competitive disadvantage,” said Brad Fisher, national data and analytics leader at KPMG. “You’re either playing offense or defense.”
The report indicates that data and analytics strategies are affecting organizations across industries. While the data-driven maturity of companies varies from industry to industry and business to business, momentum is building. Failing to have a data and analytics strategy, or executing one poorly, can negatively impact a company’s ability to compete — and therefore its value.
“Data strategies are here to stay across a number of different areas [where] we’re going to continue to invest, and it will be a bigger part of our investing thesis as far as where we put our time and energy in the portfolio,” said Ron Heinz, managing director at venture capital firm Signal Peak Ventures.
Data and analytics strategies need three key elements to succeed: The technology, the ability to execute, and a culture that embraces data-driven decision-making. How all that is evaluated is interesting indeed. Here are six examples of what investors look for before they decide to pump capital into an organization.