As seen on The Wall Street Journal the Small Business special report features Dr. John Sullivan, Showing Off your Startup to Investors (November 21, 2016).
When venture capitalists select new investments, the management team is the top criterion. Cass Business School research found that an effective management team was the No. 1 consideration, followed by strong market drivers and a unique, disruptive product.
Effectively selling the team to investors requires insightful information beyond years of experience, previous firms, degrees and technical skills. To maximize investor confidence, emphasize these 10 points.
The culture the firm will operate under. Investors insist you have a plan for developing the type of culture that is required for continuous innovation and scaling up. Mention other effective company cultures that you’ll try to emulate because they mirror your situation.
Learning and adaptive capability. Show that your team has a systematic way to stay on the leading edge of knowledge and to adapt, learn from and bounce back after failures.
Show collaboration. Show that to maximize innovation, you have designed collaboration into every aspect of your team’s workflow.
Rapid conflict resolution. Conflict is common among passionate individuals with complementary skills. Show a process and a track record for rapidly resolving major conflicts.
Show the team is forward-looking. Reveal your process for systematically spotting problems and opportunities while there is still time to act, evolve and adapt.
Balance strategy and execution. Show your team understands the strategic direction of your industry and can effectively execute the tactical aspects of your business plan.
Show you can convince others. Reveal how management has convinced top talent to join and remain with your firm. Also, include your proposed process for incentivizing and continually motivating your team.
Openness to referred talent. Few VCs expect you to have a complete team when you ask for funding but many will want a voice in “filling in the gaps.” Acknowledge those leadership gaps and show enthusiasm for accepting new team members referred by the investors.
Reveal mutual acquaintances. Showing that team members and the investors share common long-term acquaintances helps to build trust.
Team-member summaries. Don’t force investors to read a dozen resumes. Provide a summary of a one-paragraph story that sells the best aspects of each current and potential management team member.
—John Sullivan, professor of management, San Francisco State University