7 Team Attributes That Can Make Any Idea Come Alive
Grow Your Business, Not Your Inbox
There is an old saying in the startup investor community, “Smart investors invest in the team, not the idea.” As an angel investor, I’ve learned to believe in this approach, since I have seen great ideas go astray, due to poor execution and I have seen apparently marginal ideas make millions, managed by a savvy entrepreneur. Giving the wrong people money doesn’t help at the idea level.
Who would have forecast that entrepreneur Gary Ross Dahl would make millions by starting a “pet rock” business way back in 1975? Some business successes can be attributed to luck, timing, or available funding, but in this case most agree that Gary was simply a marketing genius and he created his own market through creative advertising, emotional appeal and exclusivity.
That may be an extreme case, but I’ve found that even with the proposals that include compelling paradigm shifts in technology, a hard look at the entrepreneur is often the most significant due-diligence that an investor can undertake. Beyond basic business and technical credentials, here are some of the key startup team attributes that every investor is looking for:
Team shows an appreciation and plan for marketing.
The days are gone when an inventor can get credibility by saying “if we build it, they will come.” Similarly, mentioning viral marketing without specifics won’t assure fundability. Everyone on the founding team needs marketing awareness, and a marketing plan with content.
Related: 3 Team-Building Secrets of Successful Small-Business Owners
Leader pitches the plan, not the product.
Investors look for entrepreneurs who talk about building a sustainable business, rather than highlighting the breakthrough elegance of the technology or the need for social change. Even social entrepreneurs need milestones, quantifiable results, and revenue to sustain their value.
Focus on customer needs.
Some founders are so passionate about their solution that they forget to lead with an explanation of the customer value equation. Investors assume that entrepreneurs are experts on their solution, but they want to see the same depth on customer and market dynamics.
Startup presents a plan to expand and lead the market.
Every investor I know has seen multiple plans to add more features to Facebook, or add yet another dating site. I’m looking for teams who are exploiting a new market niche, or adding real innovation to an existing domain. Investors like to see new intellectual property as a barrier to entry.
Related: A Simple 6-Step Process to Starting a Small Business
Plan includes a business model with good margins.
Counting on sustaining the business through more free users and growth in eyeballs for advertisers is a naive and risky approach and it implies investors with very deep pockets. Investors expect to hear annual revenues, average margins, customer acquisition costs and sales pipelines.
Founding team has business and domain experience.
An entrepreneur needs a depth of business experience on the team, as well as technical expertise. This should include financial, marketing, sales, and operations, all with a record of working together in setting milestones, managing results, and focusing on the market opportunity.
Business objective is clear and laser focused.
If the entrepreneur is pitching a plan that sounds like this is a solution for everyone, it’s likely that resource constraints will not allow any customer segment to be served well. The best startups are highly focused in the initial rollout, but can present an evolving strategy for broadening the market later.
Related: What Are You Willing to Give Up to Start Your Business?
It’s always likely that one or more of the team members are young or inexperienced, but every entrepreneur can attract a strong and balanced team, with the proper networking and the willingness to share equity early. Building the team later, with money from investors, is a losing strategy, since team members paid cash are less committed and investors want the team first.
Thus I would assert that build a great solution is only half the task faced by every entrepreneur. The other half is building a great team and plan for making a great business out of the solution. With both of these, you can make any idea come alive. Otherwise you will likely feel like you are working hard with one arm tied behind your back. You need both for maximum impact.