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refers to the group of individuals who are collectively responsible for managing and growing a company. In many entrepreneurial companies the management team consists of the founders and one or two key individuals hired after the company was incorporated. Most venture capitalists prefer to invest in companies led by complete management teams rather than in companies led by an individual entrepreneur. This reduces their risk in the event the founding entrepreneur becomes sick and enhances the capabilities of the company’s management to anticipate and direct the company’s growth. Few individuals possess the ability or stamina that is necessary to create and manage a company through all the challenges that come with growth. Investors usually look to the three or four people who are essential to a company’s success as its management team. Because of this, the chances of obtaining venture capital are improved greatly by presenting a complete team in the business plan. Companies with gaps in their management teams should be ready to explain what plans they have to fill the vacant spots. Most investors will want to know about these plans and how the present management team expects to fill the important vacancies. Many venture capitalists will help entrepreneurs fill those spots by identifying potential candidates from their network of contacts. As a rule, however, it is better to present potential investors with a complete management team or with concrete plans to identify and attract additional team members. In fact, a substantial risk many young companies face is the inability to identify and retain key personnel. Especially in high tech fields such as Internet security or medical engineering, few persons with the requisite skills may be available. Thus, presenting a business plan that lacks key players may make an otherwise enthusiastic investor reluctant to invest. See: Entrepreneurs, Five Factors. |
