David Foreman says there are three key things his business Praetura Ventures is looking for before deciding to invest.

Foreman co-founded Praetura Group, which provides debt and equity funding to SMEs, and a decade on it has grown to nearly 100 people and achieved revenues of around £20 million.

He runs the venture capital arm of Praetura. The firm has raised £55m in the last two years and has 19 companies in its portfolio, 13 of which are based in North.

Foreman says the starting point for any decision on investment is whether they believe in the mission.

“Fundamentally, we’re looking for a management team that we believe can deliver on that,” he says. “We’re also looking for some momentum that indicates it’s going in the right direction.

“Of course, there are other considerations like whether the market is big enough and whether the business supports scalability; but mission, management and momentum are the key things we are looking for.” 

Nailing your investment strategy

He says VCs make mistakes like everybody else. “The pandemic wasn’t a good thing for us at the time and I had many sleepless nights,” recalls Foreman. “At the time, the group had lent about £160m to SMEs and had a portfolio of 13 VC-backed businesses.

“But, at the same time, it allowed us to liberate ourselves. What were we really trying to achieve? What did we need to do to get there?

“I was able to bring in AO’s former CEO, Steve Caunce, as chairman and mentor. What he works 100% on me is ‘what are we trying to do? Let’s do that’. Don’t go outside the lines.”

Learning from founders

He continues: “Our mission is to create a world class culture, back exceptional businesses and consistently deliver more than money to the founders we have backed. And once you know the mission, it’s all about people, strategy and execution. 

“Personally, as well as Steve, I learn from the founders we back every single day.  Because we are all doing things we’ve never been taught to do. So it’s really important to surround yourselves with people who you can ask questions of.”

What is Foreman’s top tip for growth? “Growth is a journey and it’s important to acknowledge that every single founder or leader is learning all the time. No one has all the answers but it’s easy to convince yourself that everyone else knows exactly what they are doing.

“It would help if people were more prepared to talk about the failures as well as the wins.  And social media is awful for creating a false image of constant success.”