Ask any investor or successful entrepreneur, and they will reiterate that the most important factor in a start-up is the quality of its founding team. A team is more important than the idea or the size of the market or the technology or the business case, or indeed any other factor that investors will review to check the investment-worthiness of a venture.
Even if – the product is great; the technology is cutting-edge; the market is large and the company has a strong chance to be a dominant player in that large market – investors will hesitate to invest in the venture if they do not get the confidence that the founding team can deliver in the market.
What investors seek is a team that is passionate about the subject, is enthusiastic about the opportunity, has a good grasp on the dynamics of ‘business’ and not just the product/service, and who can demonstrate commitment to fight it out in the market.
While it is good to have experience in the domain, that is not a must, as that will exclude a number of bright people who either do not have work experience or are from a different domain than the concept they are pursuing. However, what is important is that even without experience in the sector, the team should have studied the sector enough to understand it very well. In fact, that is also why passion and interest in the sector is critical, because that makes it easier for a person to study the sector well.
An ideal team is one in which core functions required to execute the concept in the market are well covered – ideally – one techie, one ops person and one hustler for sales. However, the dynamics of each market differ and the team ideally should be relevant for that market. E.g. the sales person’s profile and competence for a big-ticket enterprise product (e.g. analytics) selling to large, global companies will be very different than the competence required for selling small-ticket products/service (e.g. SAAS platform) to 1,000s of smaller companies.
The founding team should have leadership skills. There is a war for talent in the market. And hence, unless the founders exude confidence and have great leadership and people management skills, it will be difficult for them to attract and retain talent.
Most importantly, the team should have the willingness to roll up their sleeves and implement on the ground. As you would have heard from many entrepreneurs and investors, ideas are a dime a dozen. It is the quality of execution that matters.
Last, but not the least, it is important for the founding team to have decided who will be the CEO from among them. That decision is critical for investors, as they do not want the founders to fight over this at a later stage after they have invested.
At GHV Accelerator, we use the filter of T.E.S.T. POC – which stands for Team – Execution Capabilities – Scalability – Technology and Proof of Concept. While each of these are important, if the first T – i.e. Team – is not the right one, scoring high on the rest of the parameters is not important.
Chief Mentor and Accelerator Evangelist
PS – This article was originally published in Entrepreneur India. Click here to view the article.