Are you raising funds? You have a lot of competition. Whether you are in casual conversations, or you are pitching in a formal setting, you need to know what qualities investors look for in a startup team.
Fundraising for your company is a full-time job filled with uncertainty. Investors are hard to read. It seems like they want you to jump through several hoops, only to ask you to jump through more when you do what they ask.
It’s difficult to tell what investors are looking for in a company and the entrepreneurs building them. They reality? Every investor is different and what he or she looks for will vary from deal to deal and entrepreneur to entrepreneur.
What follows is a very short list of qualities investors consider when evaluating an opportunity, an entrepreneur, and a team. If we were to sit down together, we might come up with twenty lists!
5 Startup Team Qualities
The key to these five qualities is that each is completely within the entrepreneur’s and the startup team’s control. Master these five qualities, and you will have a team that stands out and gets investors’ attention.
Coachable Entrepreneurs
Investors care about coachable because they expect to work side by side with you building a great company.
What is “coachable”?
It simply means that you have an open attitude to others’ guidance. Coachable entrepreneurs are open to seeking help, are motivated to listen to counsel, are able to discuss the pros and cons of advice and are willing to take action with an investor or advisor.
If you are coachable, we can work together on solving almost any challenge you, your team and your business face. If you are not coachable, good luck.
Customer Knowledge
Investors care about your understanding of customers because customers fuel growth if you meet their needs.
Most entrepreneurs have great ideas. However, few follow-up these ideas with action to determine if customers care and will pay for their product. Don’t be that entrepreneur so in love with your idea that you make the assumption “Everyone will love this!”
Talk to 50
potential
customers
and take notes
Investors lose interest when you cannot support your beliefs with data. Seek input on what customers think of your solution to their problem. Make sure customers care enough about the problem and solution to change current habits. Talk to 50 potential customers and take notes. Run surveys. Identify beta customers, get your product into their hands, and listen to their feedback.
Knowledge of your customers will allow you to build a viable business. If you don’t have customer knowledge, don’t start building and don’t start raising funds.
Cohesive Team
Investors care about a well functioning team of entrepreneurs because it is the backbone of a successful business. Investors evaluate teams by observing how you work as individuals and as a team.
Do you communicate with each other well? Does each team member understand and follow their respective roles in the new company? Are team strengths and skills aligned with current startup needs? Does the team have great relationships with each other? Is each team member’s personal and business goals aligned with the company and with each other?
Investors can add skills and resources to a company to move it forward; we can seldom fix rough relationships that hamper success.
Business Savvy
Investors care about a team's business acumen because they expect their money to be effectively used to move the business towards success.
Does your team understand the dynamics of the business’ financials? Do team members appreciate the financial resources required over a one to three year period to build a great company? Has the team mapped out options when funding takes longer than expected and sales don’t grow as quickly as planned?
A team that does not understand the numbers of their business will be incapable of using investor funds effectively. Additionally, a team lacking business savvy will have little understanding of how to cope with challenges or recognize opportunities.
Process Orientation
Investors care about processes because processes drive scalability.
Does the team focus on building repeatable processes to support the business as it grows? Are they building the infrastructure from day one such as customer feedback mechanisms, accounting procedures, and hiring processes? Are processes documented? Is the team willing to change processes as the company scales so that growth accelerates?
A team that builds reliable processes will be a team that works on the business rather than in the business. Teams that work on the business operate at a strategic level while those working in the business operate at a task level.
Building Attractive Qualities
These five
qualities
are within
your control
Take a look at yourself and your team.
Evaluate yourself and team on these five qualities. If you recognize there is room for improvement, take the necessary steps to enhance attitudes, knowledge and focus before fundraising. Authentically exhibiting these qualities while courting investors will help you be successful in both fundraising and building a business.
What other qualities do you believe matter to investors and why? What will you do to enhance these qualities within yourself and within your team?
Photo Credits:
Jumping Through Hoops via Flikr by Experience Kissimmee; Rock-Em Sock-Em Robots via Flikr by Betsy Weber; Navy Leap Frogs team via Flikr, U.S. Navy photo by James Woods; Calculator and Coins via Flikr by John Liu; Ideation and Evaluation via Flikr by leesean,
