The team that you build has enormous importance when it comes to raising money from investors, and many entrepreneurs get this wrong.
In order to pique an investor’s interest, the entrepreneur must not only present a solid plan that details how they are going to make money (the business model) but also the team that in place with experience to get them there. If the management team fails to inspire confidence in potential investors, then the meeting is over at that point. .
The core team typically consists of someone that is building the product and someone selling it. You should also Identify those plan to hire in the future. As your company grows it will bring on more of the team you have identified and existing hires will increase their hours and salaries accordingly.
For positions you cannot afford to hire filling them with a board of advisors. This includes people who you don’t pay, but you do meet once a week for coffee/lunch and use as a sounding board. Make a list of the topics you need help with and then fill with board of advisors.
For key management positions, you can bring them on your board of advisors for a period of time (say 2 to 3 months) before deciding to hire them.
Finally, choose service providers (attorneys, accountants, etc.) who have worked for companies similar to yours and leverage their knowledge and experience beyond their stated tasks.
Another issue that you should be aware of includes the addition of management and board members that have fancy corporate pedigrees, but little in the way of actual entrepreneurial experience. (I’m talking about the one that has experience with Big Company X, that you go around touting so you can name drop). Be advised that this kind of experience is not impressive to potential investors. Why?
Because investors know that fundraising for startup is a much different skill than working as a corporate Vice President--much different. And most startups with this type of expertise only have a poor track record for success.
Having a capable, qualified management team enables a entrepreneur to do whatever it is that they do best. Founders need to know that hiring people or good investors doesn’t mean they have to give up control; nor does it make it any less their company. In fact, if you research the beginnings of many successful companies you’ll find the people responsible for the technology were not the ones who took it to market. Take Apple for example: Steve Wozniak was at the core of technology development while Steve Jobs was out evangelizing it.
Of course there will always be the exceptional exception, but I challenge founders to surround themselves with managers and board members who have both entrepreneurial and experience relevant to their venture and in its current stage.