Inside the Hg Playbook: What Investors Really Want Founders to Know

We sat down with Hg, one of the continent’s most active private equity investors in B2B software, to understand how they identify the businesses and founders to back. The result is a set of insights that will be valuable to CEOs across Europe.

By Amy Wilson-Wyles

What makes a software company stand out to investors? What signals show a business is prepared for growth or transformation? And how do they really assess founders?

At Hg, Europe’s most active private equity investor in B2B software, the answers are grounded in years of experience, as the firm celebrates its 25th anniversary this year. With more than 50 portfolio companies and around $85bn asset under management, Hg has helped scale some of the most successful private software businesses in the world. But its criteria aren’t about showmanship. They’re about fundamentals: focus, fit, and a founder’s appetite to grow.

We spoke to Chris Fielding, Partner at Hg and lead within its Legal and Regulatory cluster, to understand how the firm identifies businesses ready to scale and founders built to lead. While it’s just one approach, if you're preparing your business for investment or the next phase of growth, this inside track contains some useful takeaways.

“It’s the last thing that gets switched off before a company goes bust”

That’s how Chris Fielding describes the kind of software Hg backs: not flashy apps or consumer platforms, but critical systems deeply embedded in how companies operate.

“For a lot of people, software is Facebook and Instagram and Amazon,” he says. “For us, it’s the payroll engine, the tax and accounting system, the accident reporting software in a factory.”

This focus on business-critical B2B software drives everything. These aren’t always glamorous businesses, but they are indispensable, and that makes them resilient and attractive for investment.

“Most of the 50 businesses we own serve fragmented customer bases with really mission-critical software,” Fielding explains. “It’s embedded. It’s the last thing to go.”

And the metrics reflect that resilience. More than 90 percent of the revenue across Hg’s portfolio is recurring and already secured on 1 January each year. Customer retention typically exceeds 90 percent.

Getting into that portfolio, however, isn’t easy. Hg filters for businesses with clear B2B focus, mission-critical products, and high customer retention. “It’s hard to get into that bucket,” Fielding says. “But that’s what makes it valuable.” So, if you’re just starting out, think about how you can make your company the most mission-critical piece of software around.

“We organise ourselves in clusters”

Hg doesn’t invest broadly, it invests deeply. Its structure is built around eight sector-focused clusters, from payroll and tax to healthcare and Fielding’s own specialism in legal and regulatory software.

“Anyone you bump into at Hg, whether it's an analyst or a partner, will be in one of those clusters,” says Fielding. “Everything they do is focused on that space.”

This specialisation shapes everything from sourcing deals to driving value post-investment. Teams build networks, understand sector nuances, track regulatory shifts, and know what M&A activity is unfolding.

Take Fielding’s cluster. “If you look at big banks, they’re fined an increasing amount for failing to comply with over 8,000 global regulators. We’re backing software that helps them stay on the right side of that. Or we’re looking at businesses that help find the content you need to stay compliant and use predictive analytics to stay ahead of what’s coming.”

If a company doesn’t clearly fit into one of these clusters, Hg will likely pass: not because it’s a bad business, but because the firm won’t be the best possible partner.

“You often have a brilliant founder with a great product but no team built around it”

Assessing the product is one part of the investment equation. The other is understanding the founder. And for Hg, that includes some hard truths.

“You often have a brilliant founder who’s built an incredible product,” Fielding says. “But they don’t have the best people around them. Sometimes, they also don't want anyone strong enough to say no.”

That’s why founder assessment is formalised. Hg works with an external provider that analyses team dynamics and leadership traits across thousands of deals to identify what works and what needs to change.

“We look at how the founder fits into the management team,” says Fielding. “Sometimes, it’s clear that they’ve underinvested in leadership around them. We assess that formally.”

The aim isn’t to displace founders. Quite the opposite. Many stay involved for years (often decades) but the role may evolve. Some move from CEO to Chair, others focus on product or strategy.

And the defining trait? A learner’s mindset.

“We say this to every founder,” Fielding says. “All learners are welcome. If you want to grow with us, not just because of us, then we’re in.”

“You’d be amazed how many founders simply haven’t invested in the right people”

Fielding often sees the same problem: technical excellence paired with organisational weakness.

“You’d be amazed how many founders simply haven’t invested in the right people,” he says. “No commercial lead. No serious CFO. A COO who can’t scale.”

That’s where Hg steps in, not to take over, but to build the scaffolding. In one recent example, a founder who rolled 40 percent of their business into the deal restructured the leadership team within six months, hired a chair, and filled key gaps in pricing and cybersecurity.

“He’s still the soul of the company,” Fielding says. “But he didn’t pretend to be the entire engine.”

“We benchmark the heck out of everything”

Once the deal is done, Hg avoids the trap of overloading founders with endless initiatives.

“There are a hundred things you could do,” says Fielding. “But we don’t want to swamp founder-led businesses. We pick two or three and do them really well.”

Pricing, AI enablement, and organisational design are top levers. And benchmarking is an essential part of the Hg playbook.

“We benchmark the hell out of everything,” Fielding says. “Why are you spending 2 percent more on sales and marketing than your peers? Why is your R&D spend out of line? It gets competitive but in the best way.”

That competitive edge is encouraged across the portfolio. Founders visit one another’s businesses. 

Best practice and prior experience spreads fast.

“We’ve got 50 businesses solving similar problems – that's something unique to specialist investors” Fielding explains. “That creates a flywheel of learning. And the companies in it get better, faster.”

The invitation to grow

For software founders, Hg’s approach is both demanding and rewarding. The bar is high, but the support is deep and the relationship is personal.

“This isn’t money and a wave goodbye,” says Fielding. “If you want a partner who’s going to get in the boat with you and help you row, then we’re interested.”

The help that Hg provides is significant too. It has a team of more than 50 operational experts across Growth & Pricing, Data & AI, Technology, Cyber, Product Strategy, Talent Search, and more, all focused on supporting the portfolio. Unsurprisingly, the Data & AI team is the biggest and busiest, managing over 250 live GenAI projects across the portfolio that range from improving efficiency to developing new AI-powered products. Ultimately, the ask is simple: be open. Open to learning, to evolving, to becoming the leader your business needs next, not just the one it started with.

“We’ve worked with founders who say, ‘F off, I know what I’m doing,’” Fielding says. “That’s not the relationship we want. The best ones stay curious. They WhatsApp you at midnight. They have 10-year views. They’re not looking for a yacht and a quiet life just yet, they want to keep building.”

In the end, Hg’s message is clear. “Private equity isn’t just funding. It’s alignment, structure, and shared ambition.”

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How to Think Like an Investor

Practical signals that your software business is investment-ready

• Your software is embedded and essential. If customers would struggle to operate without it, you're in the right space.

• You know your cluster. Specialist investors look for familiarity. Do you fit clearly into a defined vertical?

• Revenue is predictable. High recurring revenue and low churn signal resilience. More than 90% of Hg’s portfolio revenue is visible from day one of the financial year.

• Your leadership team is complete. Can your CFO stand up to due diligence? Can your COO scale the business? If not, start hiring.

• You benchmark and act. Top-tier investors track performance relentlessly. The best founders learn from others and adjust. 

• You want a partner, not just capital. Investors like Hg are looking for founders with ambition, humility, and a hunger to keep growing.

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