|
Anyone seeking capital should be prepared to supply the names of a reputable group of three to four experienced people who will be an integral part of the business. Conventional wisdom points to three critical positions: a CEO or general business manager, a VP of marketing and sales, and a VP of development. However, extensive past experience is not as important as the ability to show excellent past performance and good teamwork. Recognizing that most investors are investing in people rather than ideas is one of the first steps in the process of obtaining capital for your business. If you have glaring voids and inexperience represented in your management team, it is highly unlikely that you will attract the serious attention of an investor. Investors are asking:
While not every investment is made in a company with a complete ensemble of experience and capable managers, the absence of what the venture capitalist perceives as "A" players in critical positions is likely to hurt your chances of receiving an investment. Investors expect to see the most critical positions (e.g., CEO, research, sales, and financial) filled by managers with demonstrable analogous experience, a strong commitment to the business, and verifiable character and integrity. If certain areas of your team are weak, take action before approaching prospective investors. Do not expect an investor to make a commitment that is subject to upgrades in the management team. We don't want to be afraid to hire people who strengthen the team. Constant striving to compensate for weaknesses with better and better hires makes your company only stronger - and is impressive to investors. |
The Might Of The Management Team
In seeking capital, the standard mantra is that the most important factors are management, management, management. And what are investment firms looking for in management? Some commonly mentioned factors are expertise, experience, leadership, vision, integrity, openness and dedication.