When it comes to venture capitalism, angel investors and commercial lending, the old saying “Bet on the jockey, not the horse” is very true.
Simply put, it means that investors will put more faith in the investees than the actual business concept when it comes to making investments.
Yes, it is very important to have an awesome product or service, a targeted market, factual information, solid advertising and plans for operations. Anemic horses will lose the race.
However, if you are not able to make investors and lenders think that your management team, or the jockey, is capable of taking your business to the next level, then you surely will not get the capital that you want. You have to push the investors into trusting your management team.
When you write a business plan or plan to woo investors, make sure that you highlight the biographies of the people on your management team. Investors put faith in people that are:
- successful in beginning and maturing companies
- experienced in the same types of positions they fill within your business
- experienced in the same markets in which your company is a part of
- able to use the resources and connections that can build your business
- known for having reputable backgrounds within their industry
If there are gaps within your management team, then you must clarify things with the investors and talk about:
- the positions that need to be filled
- why the unfilled positions are needed in order to guarantee the smooth flow of daily operations and continued company growth
- what needs to be done to fill these positions
This will help you to get these positions filled as well as gain the trust of the investors that you are pursuing. It indicates that you know about the issues that your company is experiencing, but you are willing to accept these challenges while you are making your company successful.
As a part of your extended management team, your board of directors are also able to hold the position of “jockey”. Your investors will want to know all about them as well. Let the investors know the ways in which they help with strategic planning and making connections.
When you write a business plan, you will eventually get to a section called “Management Team.” In this section, the bios of your management team will be listed. Continue to update this section of your business plan each time that your management team grows or changes.
Although you have to always conduct due diligence when it comes to your whole business plan for the purpose of informing investors, creditors, employees and yourself, understand that the management team is considered by investors to be the most important thing that determines whether or not an investment will be made.
Promote the jockey and you should be one half of the way to getting your horse sold.