nadimsoliman@student.ie.

edu

The Dream Team

In class we have mostly discussed the attributes of a successful

start up as well as what makes a successful entrepreneur. We have also
discussed what venture capitalists and other types of investors look for in
a start up and have learnt that the most important factor regarding
investment decisions in a start up are based on team dynamic and
competency. I was quite surprised to learn that almost half of the
investors and venture capitalists surveyed had ranked team dynamic and
competency as the most essential factor taken into account when
investment decisions are made for funding a start up.
Having participated in the start up lab and currently working on a
project in venture lab, this suggested statistic has led me to think about
the topic of the ideal start up team and has raised the question: if
venture capitalists and investors place great value on the start up team
and base much of their investment decision on it, what would be the core
competencies of the ideal start up team. Based on a mix between class
discussions and and my own opinion I will attempt to answer this
question.

Probably the most obvious factor investors and venture capitalist

will evaluate a team based on is the technical or commercial competency
of the founding team. This can either mean the team members have the
relevant experience from having done a startup before or they have

developed the appropriate skills relevant to the industry of the start up

idea. Said experience will be valued by investors, especially those with no
industry expertise, as it will show that the team has knowledge in the
relevant market and is tenacious enough to complete goals.
In contrast however, the team should also be comprised of multiple
expertise, meaning that in addition to relevant industry knowledge, team
members must also possess different working skills, in order to occupy
different positions in the company and increase synergies and value
added to the company. Since in the beginning a start up must manage its
way through its journey with very limited resources, it is recommended
that

the founding

members

possess

different

skills

necessary

to

accomplish the companys goals, without the need of hiring costly labour
or outsourcing tasks.

Besides the technical abilities of the team, investors and venture

capitalist also place great importance of the interpersonal skills within
team members. I believe, communication both internally and externally is
the most important skill within an organization. Team members should be
able to clearly communicate their ideas, responsibilities and goals to one
another in order to achieve a coherent and seamless workflow in the
company. In addition, team members must have clear communication
skills when dealing with investors, suppliers clients and other relevant
parties involved in the business. Clear communications will insure a
consistent team dynamic and support managing expectations of the
external side of the business.

Moreover, the ability to resolve conflicts quickly and constructively

within a team, as most teams will likely face some obstacles along the
way which may cause internal struggles. Usually an investor can tell just
from spending time with a team, when a team may have potential internal
personality issues. The ability to demonstrate the longer term likelihood of
a team staying together and working well in spite of the inevitable
conflicts that will arise is of utmost importance to an investor and is vital
for the on going concern of the business.
It is crucial for a team to intuitively know when to persevere and
when to quit. Although this might be a harder factor to identify in a team,
investors and venture capitalists, depending on their equity stake and
degree of involvement, will generally give advice to the managing team
about future operational decisions. It is important that the team is willing
to listen and consider the advice given to them, evaluate it and then make
the decision, rather than completely neglecting it. It is not unusual for
start up teams to be exceedingly convinced with their vision, that they
sometimes forget to consider impartial and objective advice. Especially in
the case of strategic investors, who have knowledge about the industry
and years of experience, considering guidance as to proceed or quit, a
team can benefit tremendously and avoid getting trapped in their own
narrow sight.

Additionally, other strategic factors such as the geographical spread

of a team is also something which will be considered by an investor or a
venture capitalist when making funding decisions. It is without a doubt

more difficult for a new team to deal with daily business activities from
different geographic locations. While technology has facilitated long
distance communication, close physical proximity is an asset for any new
team, which aids the team dynamic, enhances communication and
ensures the commitment of all team members.
Another strategic factor is the the equity participation between
founders. Although generally speaking most founding teams have an
equal equity an investor or a venture capitalist will take note if there is an
equity imbalance. This is not only due to the fact that investors might see
a potential power struggle between the team members, which might lead
to dispute and conflict within the company, but also this might be an
indication of lack of commitment from lower equity stakeholders and may
lead to their demotivation and lack of responsibility.
The personal life of each individual member of the team may be
considered as a strategic factor and might affect an investors or venture
capitalists investment decision. A member of the team who has a family
to support might have different priorities regarding working hours, salary
level and exit strategy. Similarly, a member who already has a steady job
is probably willing to take on more risk with the start up than a member
who has invested his life savings in the company. These misalignments of
priorities and incentives, if not properly communicated from the start,
may harm the group dynamic, disrupt the flow of business and appear as
a weakness to investors. Therefore, it is important that team members
identify their priorities from the start and efficiently communicate them to

each

other,

in

order

to

set

expectations

and

assign

roles

and

responsibilities accordingly.

To conclude, it is without a doubt that investors and venture

capitalists value a strong team. While some will value other qualities in a
team not mentioned above and other investors might not even value the
team dynamic and competency as the most important factor in their
decision making process; however, it is generally understood that no
matter how great the idea is, it will never overcome a fundamentally
flawed management team. Investors and venture capitalists will definitely
put significant weight on the teams experience, the insight to identify
their own weaknesses and hire good people to complement them and its
ability to constructively deal with all the challenges that will occur along
the way.