A lot of my clients want to know what to put in this section. As in all sections of the business plan, this section should be concise, but at the same time, don’t hold back on your unique points of difference/value. I advise three things in this area (with one and two being the most important):
- Successful experience you have doing the same function somewhere else. For instance, it is best if your VP of Sales and Marketing, has been a successful VP of Sales and Marketing at a different company in the same industry. This would be considered direct functional experience.
- Successful experience starting a business/other entrepreneurship skills. If it is the same type of company in the same industry, all the better; but really this is where you show you have general entrepreneurship skills.
- Relevant Education. Perhaps the least important if you have 1 and 2 covered, but nevertheless an asset. If you have a BA in English and you are starting a high-tech company, it is probably a waste of time to mention your degree. If you have a PhD in Computer Science, however, don’t leave it off.
Remember, there are many great ideas that don’t come to fruition because of mediocre management. Investors understand this very well. Ideally you will have a complete management team that meets the above three requirements. …but don’t be discouraged if you don’t have an ideal management team to date. It doesn’t mean you can’t get funded. Strive to create the best team you can. Not only will it help your funding potential, but your long-term success as a business.
For entrepreneurship topics and tips not related to fundraising see Lance’s blog Entrepersonal.
Lance,
I disagree on one point: Unsuccessful experience is important too. Having run a failed start up or two will look much better to investors than having no start up experience at all. Now if you have run 8 or 9 failed start ups…not so much. There is a school of thought common in the Silicon Valley sub culture that you learn more from failures than successes.
On another note, I recently saw a study that suggested that management team quality is not nearly as important as was previously believed. They basically tested the “Hire an A team with a B idea over a B team with an A idea” theory of investor behavior and found that it usually was not the case. Unfortunately (embarrassingly), I don’t seem to be able to find the study now. Has anyone else seen it or know where to find it. Please don’t post a response saying “Google.”
Comment by Matt — September 10, 2008 @ 10:09 am
Great advice, I also like to see an org chart identifying the role of the future investor. Some investors want to be the GM, others want to control the board. But if you are looking for an investor who also has some skills that can add to your business include this information. (Unless it is covered else where in the business plan)
Comment by Ian Pratt — September 10, 2008 @ 8:19 pm