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How to Select an Investor in 2023

Preparing to raise capital in 2023 might feel daunting given the market, but it doesn’t need to be. For great businesses, there are investors (like Insight) who are ready to invest.

Before thinking about raising money, we’re going to assume founders have checked off some of the basics listed below:

  1. Know your specific business needs for the investment. This should be deeper than the amount of money you need to raise. Founders/CEOs seeking funding should have a well-defined business plan that outlines company growth goals, target market, financial projections, and competitive advantage. This helps articulate the value of your business to potential investors and demonstrates an understanding of the industry and market.
  2. Prepare your leadership team. Fundraising takes time away from running the business, which means your leadership team must have the skills, experience, and dedication to execute the business plan and drive the company’s growth. Assemble a team that has a diverse range of skills and expertise needed to achieve the company’s goals.
  3. Have a clear plan for using the funding. Investors want to see a clear plan for how the new funding will be used to drive the company’s growth and generate a return on investment. Be prepared to present a realistic, detailed plan for how the investment will be used to achieve specific milestones and grow the business.
  4. Finally, map the market of potential investors. Asking other entrepreneurs for advice and introductions is a great way to start the fundraising process.

Once these steps are done, you’re ready to begin seriously contemplating your next fundraising partner. Deciding to bring someone new onto your cap table can significantly strengthen your business for the years ahead and inject the capital needed to move from a startup to a scaleup.

Some tips for founders:

All investment partners have a “prenup.”

Being prepared with your goals and expectations for raising capital is great, but in today’s market, it’s important to have an open mind and willingness to have a conversation. In the negotiation of final documents, there is always a clear set of rights regarding rules of engagement if things go right — and if things go wrong. While this can feel as off-putting as discussing a prenuptial agreement early in a relationship, it is important all sides understand rights and agreements for all scenarios. Consider your position if things go wrong. What happens when things go wrong is as important as the conditions when things go right.

Consider dilution in addition to valuation.

You’re obviously seeking out capital, but don’t simply fixate on your company’s valuation number or the specific amount of money you want to raise. The more important consideration in the long run will be understanding the percentage of the cap table you are hoping to raise. While value is always important, if you are only raising primary capital you should consider dilution more than the post-money value. For example, if you are hoping to raise $25M at a $125M post (20% dilution), you can offset a 25% price disappointment by lowering the amount of capital raised. You can raise at $80M while limiting the raise to $20M. This is also 20% dilution. The only difference between the two deal structures is $5M on your balance sheet. The point? Valuation matters, obviously. But it’s only one of the variables. You can control the impact of valuation by adjusting the investment amount.

You want a partner that has enough capital to ideally support you through your next few rounds, and ultimately, deliver enough value to scale your business in meaningful ways beyond a sky-high valuation or fundraising amount.

Have conviction in what a new investor can do to add value.

This means two things. Firstly, what does the investor’s investment horizon look like? Do they have the capital and patience to be able to support you long-term? Secondly, how will the investor work with you and your team? It’s critical to know the skillset of your lead investor and ensure that they understand your industry, business, and goals for the years to come.

Besides the financial support of your investor, different firms will have different levels of deeper support available. At Insight, for example, there is a large team set up to support each individual portfolio company, streamlined through a portfolio management function. This ensures impactful, personalized support is delivered when and where it is needed most for each portfolio company.

Most CEOs and founders who choose to work with Insight are particularly excited by having access to Insight Onsite, a team of more than 130 of the software industry’s best operators, dedicated to supporting portfolio companies as they scale up. Understanding what resources different investors have available to you will help you strategically map out your board and partners to best support you at your stage of growth.

Select an investor with a network you can leverage through your journey.

Investors can be incredibly valuable partners and bring a unique perspective to the boardroom. However, being a CEO (or another C-Suite role) at a growing business in today’s climate can be an intimidating and lonely job. Insight’s portfolio of 600+ companies provides CEOs with an unparalleled peer network to lean on and learn from. Having a pool of people who are in your shoes and navigating the same challenges can be one of the most transformational assets for CEOs when building their business.

Insight’s portfolio experience programming is one of the most robust in the industry, made possible because of the global breadth of the portfolio. In 2022 alone, executives accessed nearly 80 intimate digital roundtables and webinars, and over 30 in-person events. Many of Insight’s CEOs choose to participate in the MINDSET CEO Summits, where, alongside their peers, they’re able to dive deep into the leadership and operational challenges they’re facing today and walk away with trusted advice on what to do next. Insight’s portfolio events are all designed to forge strategic connections and actionable tactics.

Raising money can be a challenging process, especially in 2023. But prepared with the proper guidance and expectations, finding the right partner can be transformational to the future of your business.

4 Reasons Founders Should Bookmark the New Insight Website

With more than 25 years of experience, Insight has established a top-tier position in software investing through times of market turbulence, a global pandemic, political unrest, and multiple tech hype cycles. Coming off a record-breaking 2022, we’re excited to tell our story with a completely new website. The new site is a testament to the expertise of Insight’s team and our dedication to being the best partner to software companies at every stage of growth.

Here are the four useful things founders should bookmark on the new site:

  1. Sectors: Powerful insight into the market
  2. Onsite: Insight’s secret engine for scale
  3. Stories: The journey from startup to ScaleUp
  4. Ideas hub: More than a blog

Sectors: Powerful insight into the market

Sector pages offer an unprecedented look into the pulse of the market as Insight sees it. These new sector pages showcase how we’re tracking a space, how much we’ve invested in the sector, and our most recent investments. This data is live and updated regularly, so be sure to bookmark sectors of interest and check back frequently.

In this section, you can find:

  • How much Insight has invested in a particular sector
  • How many companies we have invested in within the space
  • Thoughts from our investors on the space and what we’re looking for
  • How many companies Insight is tracking in the space
  • Our recent investments

For example, you can see from our AI/ML sector page that (at the time of writing) Insight has invested $4.7B across 104 companies in this space, tracking over 13,612 companies since 2016.

With our expansive network of buyers, builders, and talent, founders should bookmark their sector’s page to stay up to date on Insight’s investment activity in the space.

Onsite: Insight’s secret engine for scale

As an investor, Insight’s responsibility is to help our portfolio companies grow and scale. What sets Insight apart from other investors is our team of 130+ operators in sales/customer success, marketing, product/tech, and talent. The Onsite team provides operational expertise to accelerate our founders’ vision. See examples of the specific engagements our Onsite team has made in our sectors pages, or click into the team page to browse Onsite leadership and get a sense of the expertise they offer.

Insight Onsite engagement

Stories: The journey from startup to ScaleUp

There’s a reason our portfolio stories are featured at the very top of our homepage. Insight is a dedicated partner at every stage of ScaleUp growth, and our team knows software better than anyone. Our new homepage is focused on telling these success stories to celebrate our portfolio and inspire the next generation of founders.

Monday.com IPO

For example, from Insight’s homepage, you can read the story of our portfolio company monday.com. Beginning with Insight’s investment in series B, advising with a company rebranding and creation of a successful channel partners program through Onsite expertise, and participating in their series C fundraising round. In mid-2021, the partnership and hard work paid off as Insight supported monday.com through a successful IPO.

There’s a reason top founders partner with Insight — we’re committed to doing the hard work required to scale a company, and we’re equally committed to celebrating success.

Ideas hub: More than a blog

Just by reading this, you have discovered our new ideas hub. In this section, you’ll find curated content on the growth strategies, benchmarking data, industry insights, and stories that founders and leaders need. Bookmark this page as our team publishes exclusive ScaleUp reports and industry data on the topics data ScaleUps need to be successful throughout the year. Prefer to get this content in your inbox? Sign up for our newsletter, Field Notes, at the bottom of this page.

With more than two decades of investing experience, Insight’s team has learned the patterns that identify winners. With our new website, any founder can take advantage of this expertise and knowledge.

2022: Year in Review at Insight

2022 is (nearly) a wrap! Insight Partners concludes 2022 with more than 750 investments over the firm’s history, over $50 billion in all-time commitments, and over 400 M&A transactions to date for the portfolio.

Insight Partners by the numbers 2022

Notable 2022 Milestones

Additionally, in 2022 the firm announced its largest fundraise to date, with $20 billion raised in Fund XII (inclusive of the Fund XII buyout fund). This year’s fund represents one of the largest global fundraises to date dedicated to investing in high-growth technology and software companies driving transformative change in their industries.

2022 also introduced the first ScaleUp event from the firm, drawing over 1,700 registrants and featuring presenting partners Citi and Nasdaq. 2022’s event focused on the future of AI technology. Stay tuned for the announcement of 2023’s ScaleUp event.

Portfolio Company Engagement in 2022

Other 2022 highlights include a focus on portfolio company engagement with some of Insight’s key sectors, including IT infrastructure, cybersecurity, fintech, e-commerce, and DevOps. Especially notable is the engagement with early- and growth-stage companies focusing on scaling up.

number of portfolio companies Insight engaged with in 2022

 

2022 Awards and Recognition

Insight received multiple firm awards* showcasing individual investor and firm achievements, including:

Insight’s Secret to Scaling

Finally, 2022 highlighted the impact of Insight’s Onsite team, a group of 130+ experts in sales, marketing, product, and talent dedicated to helping the Insight portfolio scale up. The Onsite and portfolio experience teams logged countless hours supporting over 450 companies, contributing nearly 800 guides, benchmarks, and handbooks to the exclusive Insight portfolio GO community platform, and hosting 200 digital and in-person events in 2022.

insight onsite impact numbers 2022

 


Read more: Here’s what makes Insight’s portfolio experience different.


 

 

*The awards referenced herein are the opinions of the parties conferring the awards and not of Insight Partners. These parties, which are not affiliated with Insight, issued the awards. For the awards given to individuals, Insight submitted nominations on behalf of certain of its personnel. The parties’ recognitions are not indicative of Insight’s future performance and were not based on evaluations of clients or investors of Insight. There can be no assurance that other parties would reach the same conclusion as the foregoing. Insight paid a fee in connection with its applications for Inc. award consideration, as well as to secure award receipt from GrowthCap after being notified of the selection of certain of its personnel for awards. In general, the receipt of compensation influences, and is likely to present a potential material conflict of interest, relating to any granted award.

8 Tech Investors Share Predictions for 2023

2022 was a busy year for the team at Insight. As hype started to build around the use of AI in our everyday lives, Insight held its first ScaleUp:AI conference, featuring top industry speakers and hosting over 1,700 attendees. The firm also grew the Onsite team — Insight’s dedicated ScaleUp engine of Sales, CS, Product, Marketing, and Talent experts — to over 120 operators to better support portfolio companies, help them focus on metrics that move the needle, and prepare them for whatever comes next.

As we wind down the year, eight of Insight’s Managing Directors share some thoughts about what’s top of mind for tech investors going into 2023.

insight partners investors
From left to right:
Ryan Hinkle, AJ Malhotra, Rebecca Liu-Doyle, Thomas Krane
Michael Yamnitsky, Nikhil Sachdev, Lonne Jaffe, George Mathew

We’re going to hear a lot more about AI.

If 2022 was the year of crypto, 2023 will be the year of AI truly breaking into the general population’s awareness.

The shift from analytical AI to generative AI

Lonne Jaffe: “Many had been operating under the assumption that manual labor and simpler knowledge work would be most disrupted by AI and automation, but with large foundation models like GPT-3 and DALL-E, we’re seeing AI systems make enormous progress in highly creative tasks like design, programming, music, and creative writing. This will likely continue in 2023 with the release of systems like GPT-4. At the moment, the reliability of these models is still a major challenge — they often hallucinate answers that are false but still ‘speak’ confidently. This kind of unreliability could be problematic for a lot of use cases, like customer service, education, and healthcare. If you don’t already know the answer, it can be hard to tell whether some AI-generated responses are correct.”

Nikhil Sachdev: “We’re moving from analytical AI (analyzing/parsing data and identifying trends and patterns) to generative AI (creating new content or interactions based on patterns). Applications we’re seeing now are benefiting from powerful (often open source) large language models, cheaper computing costs, and established MLOps platforms. These AI applications are starting to overtake human functions and have the potential to augment and disrupt existing entrenched software apps.”

George Mathew: “More of us should be talking about explainability and bias detection as more large language models (LLMs) get to scale and production. We should all be preparing for what opportunities will emerge with a multi-trillion parameter large language model like GPT-4 being released.”

Lonne Jaffe: “It will be very interesting to watch where the value will accrue and where economic moats will be the deepest. Some believe that the economic moats will accrue to the companies building the large foundation models because they require so much time, skill, and infrastructure spend. Others think that the moats will be with the companies fine-tuning the models for specific use cases because of the feedback data demand-side economies of scale. Still others believe that the value will be in the non-AI software that allows the models to integrate with real-world systems. There may even be a layer of value in between the foundation model creation and fine-tuning, requiring a new set of MLOps tools and skills that focus the foundation model for a specific domain, but in a way that is more involved in modifying the internals of the foundation model than needed during the fine-tuning process.”

Moving from AI in infrastructure to AI in applied real-life situations

lonne jaffe quote

Lonne Jaffe: “One area where we’re likely going to see continued huge progress in 2023 is in applied computer vision AI in healthcare. The tech is already approaching human ability in domains as varied as polyp detection in colonoscopies, diagnosing gum disease in dentistry, breast cancer screening in a mammogram, etc. This can improve diagnostic accuracy, save physician time, surface candidates who would benefit from clinical trials, and even reshape how the industry works.”

The metrics investors care about in 2023 will shift to retention and efficiency.

“More nailing it, less scaling it.”

Ryan Hinkle, Managing Director: “2023 is about more nailing it, less scaling it. 2023 should be a year where it’s efficiency first, additional costs second. It is really difficult to focus on efficiency when you are adding costs. That is the fundamental pendulum shift: it has abruptly shifted from ‘if you believe it, it will come’ to ‘if you can’t see it, it doesn’t exist.’”

ryan-hinkle

Metrics that matter

Nikhil Sachdev: “Customer NPS is always important, even more so in this environment. (Are you nice to have? Or, I can’t live without you?) NPS flows through all the relevant financial metrics in a business. The more customer value/love you generate, the better your logo growth, pricing power, retention, and efficiency. And goes without saying in this market, it’s no longer growth at all costs. Companies and investors are focused on durable, efficient growth.”

George Mathew: “Gross retention — more than ever, you have to be able to retain customers to stabilize your 2023 growth plans.”

george-mathew

Thomas Krane: “Path to breakeven based on current balance sheet, cash burn as a multiple of net-new ARR.”

AJ Malhotra: “It’s all about how you’re investing to drive efficient growth. My key metrics are about the same: previously, it was all about net-new ARR, and now gross profit matters more. Your true gross (and net) retention becomes very, very important as well — this separates strong companies from weak ones. Cash burn also becomes imperative in this environment.”

Rebecca Liu-Doyle: “In this environment, two things investors are watching especially closely are gross margin and gross retention, both of which are prime leading indicators for steady-state free cash flow potential. In steady state, will this be a 15%+, 25%+, or 50%+ FCF business?”

DevOps will prioritize simplicity.

Michael Yamnitsky comments on the developer perspective: “The great vibe shift of 2023 is a return to simplicity! Back in 2017, it was cool to tinker with the nuts and bolts of Kubernetes, but as of 2022, we’ve reached peak complexity and specialization in cloud infrastructure, and the pendulum is swinging back. Developers want to simplify their stack and ship code faster. To this tune, we’ll see a resurgence of PaaS and other developer-friendly services that eliminate the toil while retaining all the benefits of 10+ years of advances in cloud technology.”

Thomas Krane, Managing Director: “In DevOps, cost pressure will put new pressure on public cloud workload adoptions and reinforce the need to have interoperability between on-premises IT and cloud services. This creates opportunities for new vendors in the space.”

Rust will be all the rage

Additionally, Michael adds: “Rust is all the rage and demand for rust programmers is growing. The performative nature of this programming language makes it a fit for backend-heavy development, particularly in the infrastructure and developer tooling space where performance can be a key differentiator.”

The overall economic environment will be uncertain for a while, but it’s not all bad news.

Ryan Hinkle: “None of us are used to inflation. Inflation hasn’t been a consideration for literally 30 years. Because of inflation, if you aren’t growing 8%, you are shrinking on a real basis. We enter 2023 with a great deal of known issues — inflation being front and center — but no real ability to forecast what comes next. In 2023, we will need to re-evaluate on a quarterly basis or even more frequently, as a year will feel like an eternity. Years make sense as forecast building blocks when things are well-behaved. These are not well-behaved times.”

Nikhil Sachdev: “Market sentiment is as negative as it has been since the Great Recession. We are seeing a combo of inflation, rising rates, cratering multiples, geopolitical turmoil, and de-globalization, which is impacting our supply chains. On top of that, the demand curve is being whipsawed – first as we lap a period of strong pull forward in digital growth driven by the pandemic period, and now budgets and spend tightening. It’s time to go back to basics — focusing on durable growth and building/scaling efficiently are the fundamentals that will enable companies to succeed regardless of the macro. Just remember that things are never as bad as they seem at the bottom and never as good as they seem at the top.”

Thomas Krane: “Companies that largely sell into tech companies with products linked to headcount will see a significant medium-term downdraft in revenue, but there will be a strong recovery on the other side for those that survive.”

nikhil-sachdev

Survival of the strongest will drive consolidation

Nikhil Sachdev: “So much of the bad news is out and now baked in the cake that on balance I think equity markets will be more constructive over the next year. I think we’ll see more private tech dealmaking. Growth-stage companies will still need to raise money, maybe at different multiples than before. We are also going to see much more consolidation as companies that can’t or don’t want to continue down the standalone path look to partner with strategics.”

AJ Malhotra: “We’ll see consolidation — lots of companies have raised lots of money, with unsustainable burn rates, cost structures that may not be efficient, and that means some will not be able to raise follow-on rounds and will need to sell. The velocity of fundraising that happened in the tailwinds of Covid from 2021-2022 was a unique moment in time.”

Ryan Hinkle: “Whatever this recession will be, it will really test what is ‘needs to have’ vs. ‘nice to have’ and inform what gross and net retention looks like. We have not had a meaningful downturn since SaaS emerged as a dominant trend in digital transformation.”

There are opportunities in uncertainty

rebecca-liu-doyle

Lonne Jaffe offers several examples of how tech, and AI specifically, could help to alleviate inflationary pressure: “The go-to reaction to inflation is to have Federal Reserve Bank raise interest rates and to slow the economy and raise unemployment. But this comes at a huge cost. Despite the anxiety around robots and automation taking jobs, there can be an opportunity for tech to help alleviate inflationary pressure by increasing efficiencies and making us all more productive. In a similar way as collaboration software helped the economy cope with isolation from the pandemic, this kind of AI-powered efficiency improvement, in a way, could become the unsung hero of this inflationary crisis period.”

George Mathew: “Backoffice sectors like supply chain, procurement, and business process outsourcing all have fundamental opportunities to be transformed by generative AI.”

Thomas Krane: “The cost of cloud services will create opportunities to preserve and even expand on-premises IT.”

Michael Yamnitsky: “One of the positives of continued economic uncertainty going into the new year: the spotlight shifts away from the hype-chasers and storytellers and towards the humble entrepreneur who has been quietly owning their craft.”

Rebecca Liu-Doyle: “Certain categories — like beauty in consumer and automation in enterprise SaaS — have counter-cyclical tailwinds, and this may be their moment to shine.”

AJ Malhotra: “New company formation will increase because of layoffs, and lots of talented folks will have new time on their hands to build something new.”

thomas-krane

Hiring might get easier.

George Mathew: “There will be a much more available labor market as hundreds of thousands of tech workers are being laid off at the ‘Big Tech’ firms.”

AJ Malhotra agrees: “Hiring is a big opportunity right now! A lot of good people are in the job market because of layoffs. Hiring may become easier given the talent out there. We have dueling realities — giant tech companies are doing layoffs and hiring freezes, but unemployment is low. We’re still seeing hiring in many industries.”

There’s still a lot to be excited about in tech.

aj-malhotra

Nikhil Sachdev: “While I acknowledge we are in a peak hype cycle for AI, I think the secular trend is real and feels like we are on the verge of an explosion here. AI will impact horizontal and vertical segments within software.”

Michael Yamnitsky: “I’m excited about WebAssembly. It has the potential to bring unparalleled levels of efficiency and security to computing and transform the way developers organize and collaborate around code. But most importantly, it’s portable — making it a unique fit for the next wave of distributed applications.”

Thomas Krane: “Threat intel will finally get recognition as a critical baseline/foundational priority for a strong cybersecurity stack.”

AJ Malhotra: “It’s easy to be a pessimist but there are a lot of good things happening right now: hybrid work environments are better overall and have provided more flexibility to people, there’s low unemployment. There’s tons of opportunity to do things more productively and more efficiently. Tech dealing with carbon emissions and clean energy transitions, enterprise software selling into financial services, software for the build environment, and tech dedicated to improving healthcare delivery are all exciting areas right now.”

This post was compiled and edited for conciseness and clarity by Jen Jordan.

Pay Transparency is Here to Stay. How Can You Build Salary Ranges in Good Faith?

Pay transparency. It’s a topic on many HR leaders’ minds. With a renewed focus on inequality in pay, many local and state governments are putting laws into place with the intent of positively impacting pay equity for underrepresented groups.


Key Insights

  • With NYC, California, and other jurisdictions passing pay transparency laws, it’s important for HR leaders to be prepared for how to stay compliant in their organizations.
  • Start by looking at your internal salary data by job level, function, and geography to identify the median or average salaries.
  • Avoid publishing salary ranges that are too broad.
  • Be ready to document and explain the reasoning behind the salary ranges and philosophy to create a truly equitable pay culture at your organization.

Most recently, New York City enacted a pay transparency law requiring employers to state the minimum and maximum salary within job advertisements. The law applies to any company that has at least four employees, one of which is based in NYC. It also impacts any jobs that could be performed in whole or in part in NYC – in other words, postings for remote roles are not exempt.

NYC isn’t the first nor the last jurisdiction to pass such a law. California is close behind, launching a state-wide law effective January 1st, and we anticipate more local and state governments following suit through the next year.

As this trend in pay transparency continues to grow, employers need to rethink how they approach their pay ranges to not only meet the demands of these new laws but also to ensure consistency and equity across their organizations.

So how can organizations create salary ranges in “good faith”?

  1. Leverage data. It’s important first to analyze your internal data. Look at salaries by job level, function, and geography to identify the median or average salaries. You should also leverage external benchmarks through a compensation benchmarking tool. Again, you can examine market data by job level, function, and geography to see how your current range compares to the broader market. As one way to potentially calculate a range in good faith, you can calculate a percent below and above those averages or medians based on geography, experience or education, scope, etc. It’s important to note that you should also proactively identify any employees that may be below your identified range. Once these ranges are shared publicly, you can anticipate employees asking why they fall below or on the lower end of said range.
  2. Try not to make your range too broad. As a workaround, some companies originally tried to state excessively large ranges such as $100,000 to $300,000. However, some local agencies – like the Colorado Department of Labor – are fining a few businesses and issuing hundreds of warnings to businesses with too broad of ranges. Broad ranges also can indicate to a candidate that you lack a transparent culture, which can detract from the overall quality of your applicant pool. If you do have a broader range, you need to ensure you have a good faith reason to do so, such as the role is remote and the salary will be based on a candidate’s geography (e.g., on the higher end of the range if based in NYC) or that the role can be done with varying levels of work experience. Additionally, if an employer has no flexibility in the salary being offered for one particular role, it is ok to make your range smaller.
  3. Document, document, document. To truly build a range in “good faith” you will have to put some forethought into those ranges. If you are able to document and explain why you’ve created a range, it will help you mitigate risk. It also helps ensure that you are truly building a more equitable pay culture at your organization and makes it easier to explain to employees your pay philosophy.

Pay transparency is here to stay. If you have employees in multiple states, it’s better to prepare at large for these laws versus trying to manage multiple processes as more laws come online.

At the end of the day, these laws are meant to close the racial and gender wage gaps and generally remove the stigma around talking about salaries. Preparing now not only ensures you stay compliant but also builds a culture of transparency and equity in your organization.

Enterprise Mindset: 3 Questions a Former Credit Suisse CIO Always Asks When Evaluating a Technology Experiment

This post is a special feature of Insights Distilled, a weekly tech-focused email briefing for busy financial services executives. Learn more and sign up here. 

While concerns of an economic downturn are driving cost-cutting measures across the enterprise, IT spending – including digital transformation budgets – is expected to remain strong. Not only can technology hedge against prolonged economic instability by driving efficiencies or increasing security, but the stakes are too high to slow down on transformation projects now.

“You can’t afford to not think about digital,” according to Radhika Venkatraman, Insight Partners’ CIO-in-residence. “This is not ground zero of digital transformation; we are now at a point of revolution.”

While the economic climate won’t cut off technology spending, it will bring project prioritization into sharper focus, making it more critical than ever for ScaleUps to understand the perspectives of enterprise leaders. Venkatraman – who served as a CIO at Credit Suisse and Verizon – can offer a peek into how top tech executives think about innovation.

“You can’t afford to not think about digital. We’re at a point of revolution now.”

During her five years at Credit Suisse, Radhika Venkatraman built a “well-oiled machine” for sourcing, evaluating, and scaling technology experiments. While serving as a chief information officer and chief digital officer for its investment bank, she built a process that helped it fundamentally change how it approached innovation.

“Having a digital mindset is not about taking your old process and just asking someone in IT to automate it,” she said. “At the end of the day, if you want to disrupt yourself digitally, you must reimagine your data, operations, talent, and culture.”

As part of this process, she honed her ability to efficiently filter ideas and select which experiments were worthy of funding. While her evaluation criteria mainly focused on internal projects, it’s instructive for ScaleUps to peek into her process: When pitching a leader like Venkatraman, be prepared to explain how your technology solution fits into this equation.

3 questions to ask when evaluating an idea

First, what’s the probability of success versus failure for a given project?

Leaders like Venkatraman want to surface bold ideas balanced with risk appropriate to the firm’s appetite.

“If the idea is absolutely going to succeed, you should just be funding it,” she said. Then, those ideas should flow through the typical business evaluation process versus the innovation pipeline.

For ScaleUps, the real competition to your product isn’t other similar solutions in the market: It’s the home-grown tools an enterprise could build internally. You should be able to articulate why it would be challenging to replicate your solution – and more importantly, its impacts – without a partnership.   

“And if an experiment has almost no chance of succeeding, then why bother funding it?” Venkatraman added.

Share several robust case studies on how you’ve worked with other major enterprises to give leadership confidence in your credibility and experience.

Next, she asks whether an idea is focused on incremental efficiency gains or something more ambitious.

“When you’re creating small amounts of efficiency through your experiments, I’m not interested in that,” she said. “I always tell people to go for a new market opportunity or a new pool of revenue, something which indulges and engages your creativity.”

Have a clear-eyed pitch on how your solution will genuinely move the needle. Don’t just tell the technology story: Prepare to explain the business rationale of your solution, with insight on the rewards that make it worth deploying. Finally, tell them how your product will help them gain an edge in a market that’s getting increasingly tight.

“If your experiment is outlandishly successful, but your output is tantamount to giving birth to a mouse, that’s not an experiment you want to spend your precious resources on,” she said.

Finally, she asks: What timeline is required for testing?

“Fail fast,” she said.

It’s best if you are prepared to quickly spin up a proof-of-concept in an enterprise’s sandbox environment with synthetic data and prototyping tools. Leaders like Venkatraman are juggling so many potential ideas and experiments that they don’t want to wait nine months to understand whether a given partnership could work. Make it clear that testing your product won’t require Herculean effort.

Then, once you score a deployment, start proving your value right away. Producing small wins right out of the gate will help you build a case for winning additional buy-in and potentially larger scope

During her time at Credit Suisse, Venkatraman’s innovation pipeline received over 400 ideas and funded about 18 different experiments. Ultimately, 10 went to production and 3 became new business opportunities – including a so-called “Netflix for bonds” project, a recommendation engine for bond traders.

For more interviews with top financial leaders, paired with incisive analysis and useful case studies, sign up here to receive Insights Distilled, our weekly email briefing all about innovation for execs at banking and insurance firms.


Insight Partners’ CxO-in-Residence program brings a G2000 C-level technology leader in-house to share their knowledge with Insight’s portfolio. Through focused feedback sessions, our portfolio can test messaging and positioning strategies, and learn best practices on selling to the enterprise.

 

About Radhika Venkatraman

Radhika Venkatraman

Radhika Venkatraman worked at Credit Suisse between 2017 and June 2022, heading the data and technology functions for the global investment bank division of the group risk and compliance office, Under her leadership, the division developed and implemented a comprehensive data strategy and delivered several bank-wide regulatory programs. She also spearheaded the bank’s innovation agenda, including developing and implementing large-scale platforms for trading, client experience and mangement, compliance, and risk management.

Before joining Credit Suisse, Venkatraman served as SVP and CIO of Verizon’s network and technology organization. There, she worked closely with leadership teams in strategy, finance, and operations on initiatives to expand margins, increase operational efficiency, and enhance the customer experience.Prior to being promoted to Verizon’s C-suite, Venkatraman led the software teams that scaled Verizon’s premiere internet service (Fios) to support 65% year-over-year growth. Her teams’ efforts resulted in 99% on-time customer performance and a 71% reduction in customer complaints.

Alongside her role as Insight Partner’s CIO-in-residence, she’s a member of the board of directors at internet provider Brightspeed.

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