Read This to Get VCs Perspective on Why a Good Management Team Matters
Many business models rely on a certain amount of funding to realise their goals. There are various sources of funding available for startups such as government subsidies, loans or crowd funding. However, in this article we will focus on VCs and dig into one of the features they value the most while deciding which business to invest in.
So what lies behind Venture Capitals’ investment decisions?
Journal of Financial Economics revealed that one of the most impactful grounds is the abilities of the management team, rather than business related characteristics such as the product. In an efficient management team, each member brings an added value to the team. But how do VCs evaluate the management team’s strengths and abilities?
Have a Clear Goal in Mind
It is crucial for venture capitalists that your startup has defined a clear mission statement with a measurable goal for management and the employees. A manager who prospers in communicating that goal and has his/her team on board with it, is what venture capitalists look for.
Have Good Communication Skills
Your management team should be able to express ideas, objectives and achievements in a clear manner. To thrive in communication, the team should improve its story-telling skills and have an effective elevator pitch ready at all times.
However, good communication skills come both ways!
Your team should be open to feedback, whether it’s positive or negative. Moreover, it’s vital not to only listen to the feedback, but also to implement it effectively.
As we have seen during the pandemic, being a successful business requires lots of flexibility! The team must be willing and able to adapt to changing circumstances and trends. Never be blinded by past successes and look for ways to fit yourself in even when it’s not urgent to do so. To showcase this skill to venture capitalists, have some scenarios ready for possible threats/ opportunities in the future and prove that you are ready to adjust to them. Make sure you explain your business is able to modify if required.
To showcase this skill to venture capitalists, have some scenarios ready for possible threats/ opportunities in the future and prove that you are ready to adjust to them.
A venture capitalist looks for a team that is passionate and enthusiastic about their product. A team who believes in their mission.
Show your commitment by always having a positive attitude and being resilient even in difficult situations. At the end, a truly engaged workforce is more likely to achieve its objectives and targets and, thus, help the VCs gain more from their investments.
We hope this article was helpful for you! Our team can help you get in contact with investors and support you in your funding journey. From shaping your pitch to negotiating term sheets with investors: we stand by your side to make sure all funding opportunities are available for your company.