Are you at the stage where you are wondering what investors look for in founding teams?
Your team is the most valuable asset your startup has. The team is the top factor most prospective startup investors will be evaluating when debating the ventures they will fund. So, what exactly are they looking for? How can you make sure you check all the right boxes?
What Are Investors Looking For In Your Startup Team?
Getting the team right, and presenting them right is the most important part of fundraising.
It doesn’t really matter how great your pitch deck, product, business model or the problem is, unless you have the right team.
Keep in mind that in fundraising storytelling is everything. In this regard for a winning pitch deck to help you here, take a look at the template created by Silicon Valley legend, Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
Here’s what they want, and how to serve it up well.
When thinking about what investors look for in founding teams keep in mind the odds are overwhelming that your startup will fail, or you will at least have to pivot, at least once. Investors are happy backing the best teams, and have proven to stick with those they really believe in through these trials. They’ve often even funded second ventures or left their capital in place after a first failure, providing the team is right and is truly committed to surviving and winning.
Show examples of your commitment. What have you sacrificed so far? What skin in the game do you have? How long are you willing to commit your life to this? How far will you go to make it work?
Grit & Resilience
This is going to be hard. Being an entrepreneur means signing up for a non-stop string of challenges to be taken on and solved every single day. Nothing you have done so far may come close to the challenges ahead. It doesn’t end until well after you exit the company either. So, what are some examples of how you’ve faced extreme adversity before, and pushed through it to success?
Big ideas are fun and inspiring. They mean little, especially from a business and financial or investment perspective if they aren’t backed up with real ability.
It is the best team who will win this sector. So, who is on your team?
Show your industry and domain experience. Show how your team harnesses well rounded business experience. How strong are you in operations, management, logistics, marketing and distribution? Previous startup acquisitions are a big plus too, but not necessarily a golden ticket to guaranteed funding.
As part of addressing what investors look for in founding teams, note that equity fundraising is even more about enrolling the elite experience of your incoming investors than the money itself.
They want to add value and leverage their resources to help this be successful. They can’t do that if you aren’t coachable.
No one knows everything. The big difference in startup success is in being able to listen, learn, seek out the best help, and even more importantly, implementing that advice. Your pitch deck may be the primary evidence of this quality, or lack of it.
Can You Get Along?
This is business. Yet, there are plenty of opportunities for investors. Life is too short to get married to someone you are going to loathe working with every day for the next decade. Peter Thiel has put it as he likes to invest in founders who he’d like to have a beer with. You have to be likable as well as capable and committed.
Will you do what you say? Will you be honest and act with integrity? Will you keep them out of trouble and their capital safe?
They are putting a lot on the line to invest with you, including their reputations and careers.
Don’t just say it, prove it. This is a critical aspect of what investors look for in founding teams.
What If Your Team Isn’t Strong Enough?
What if your team isn’t strong enough, or at least isn’t checking all of these boxes on paper or when investors start doing their research and due diligence on you?
Round out your team and strengthen it before you complete your pitch deck and start approaching investors. You don’t want to burn vital opportunities with the best fitting investors. Or they probably won’t tell you why they are turning you down, and won’t give you a second look.
Will the gaps by bringing in more cofounders, respected advisors, and hiring key team members to head up critical departments as well as bringing in high quality executives with strong resumes.
If you are still coming up short, show how you will use this round of funding to hire and fill these gaps or bring in the investors that can close the loop.
Furthermore, I cover how to position the team in a pitch deck in the video below.
How To Convey How Great Your Team Is
Don’t just expect investors to know how good you are or to ask about perceived issues. They are typically approaching pitches from the mindset of this being another waste of time, a wannabe team that doesn’t know what they are doing and doesn’t have what it takes. Don’t get thrown in that bucket or give them another reason to back up their pessimistic assumptions.
Preempt their doubt by showing up well and demonstrating your strengths throughout your pitch deck and pitch. Use stories to show your grit and commitment. Use your team slide to highlight key accomplishments. Invest in professional copywriting for your resumes, LinkedIn bios and the executive profiles on your startup website.
Then prepare for the common questions you will get from investors and strategize how you will spin your answers around to establish your advantages as the team to invest in, in this market.
Hopefully this post provided you with some perspective as you are looking into what investors look for in founding teams.
You may find interesting as well our free library of business templates. There you will find every single template you will need when building and scaling your business completely for free. See it here.