Strength of the Management Team - The Key to Attracting Investors
Potential investors in entrepreneurial enterprises place significance on the ability of the management team to enact change in receptive markets as to earn a multiple of their original investment. It is the ability of the management team to generate confidence that they can deliver results that makes the difference to investors. They must be able to demonstrate their ability to deploy people to execute processes that deliver products and/or services to large markets.
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Potential investors will more readily finance an entrepreneurial enterprise on the basis of the strength of its management team, and when the market is large, ready and aware of its products and/or services, than the underlying benefits and features of the products and/or services themselves.
A successful management team may be able to repeat their successes as serial entrepreneurs by knowing how to entertain, inform, convince, persuade, and negotiate with people, and manage processes.
The management team must be able to demonstrate that they can enact change, both by being able to cause it or respond to it depending upon opportunities and conditions (especially crises). Causing change affects competitors, but being able to respond to change caused by competitors is essential to sustainability also.
The acceptance of new products and/or services in existing markets, or existing products and/or services in new markets is based upon employee, customer, and even supplier constituencies being willing to change their behaviors.
Hence management must play the leadership role in order to establish an environment that motivates specific constituents to change. This means being able to communicate both aspirational and inspirational messages that cause others to change their behaviors to adopt a product and/or service, either de novo or as a substitute. Such change occurs by understanding the difference between what people need and what they want, and creating emotional messages that cause them to act with urgency.
Therefore, a management team seeking financing is likely to lose their investor audience if they focus solely on presenting a products and/or service. This rule generally applies even if the value propositions offer strong benefits and features.
Effective leadership and management techniques are enterpriship (entrepreneurship, leadership, and management) competencies.
