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The importance of Great Team - Vladimir Vexler's Blog

Vladimir Vexler's Blog

Strategy & Management, Performance & Scalability, .Net Architecture.

The importance of Great Team

It's been quite a while, since I posted something.
I have been busy a lot with my startup DCF Technologies. But, since I promised to keep update and share my experiences and knowledge - I have to keep my promises.

Today I'll tell you about the importance of having a Great Team when creating a startup.

The life of a startup-ist is very tough and actually unstable. In the early stages there are lot's uncertainities. Things keep on changing, not progressing as you planned, strategy changes often, technology progress can run for weeks but can also go to a dead end - And then new opportunity arrives.

Most important thing is that not everything can be predicted!
I think of my self as a very skilled manager that always plan my steps very far ahead, also trying to predict what can go wrong and how can I prevent or react to that.
But I found out that in real startup life the number of uncertainities should be tripled and many things can not be predicted.

What all this basically means is that the early stages are very unpredictable, and having the ability to share this with a colleagues helps a lot.

But even without this I discovered an interesting truth about Capital Raising process from VC's (Venture Capital firms) and even Angels.

Here is how they estimate your ability to deliver and decide whether to give you money or not:

  1. Great team = 70% of decision
  2. Very large market = 25% of decision
  3. Technology = 5% of decision

This means that if you have an excellent team - 70% chances that I can get funding.
The technology, the market, prototype, some clients - these items are important. But not as important as the Team.

So If you are planning on founding a startup company - start with understanding of importance of the Team!

Vladi

 

Posted: Oct 29 2007, 05:07 PM by Vladimirv | with 8 comment(s)
תגים:, ,

Comments

Kim said:

Thanks for sharing your experiences.

As for the 70-25-5 division. What do you think about the following observation.

A great team is a go - no go variable. It's not merely 70% out of 100. If you don't have a great team the market and technology doesn't really matter to prospect investors.

# October 29, 2007 7:19 PM

shvilam said:

אני קצת מתקשה להבין אייך צוות של משקעים

שסביר להניח שלא ממש מבינים בטכנולוגיה מצלחים להעריך

את טיב הצוות

האם הערכה של המשקעים את טיב הצוות הוא על ידי בכמה מהשמות בצוות הם כבר נתקלו בעבר או שמעו על אותם אנשים

# October 29, 2007 9:58 PM

ekampf said:

I dont understand how you could have possibly reached such an observation, or how VCs can evaluate your team...

I know people who got VC investment before building a team too...

# October 29, 2007 10:48 PM

Vladimirv said:

Kim,

I don't agree that a great team is a go - no go. But if you don't have a team and your are alone at start - it is usually a no go.

This is not right only if you are an exceptional entrepreneur (with several companies that made good EXITS).

Shvilam,

You are right about it - it is hard for them to evaluate the team. But they have several key tools:

1) When you know a person's name it is pretty easy to find out industry recomendations and history on him. Especially if he already have been in a startup venture foundation (in that case it is easy for them). If he does not have such - it also says something.

2) Technology is really not the most important thing. Of course, they have to believe that this team has the skils to build this product.

But, creating a company requires marketing, strategy, technology, sales skils, and of course leadership.

And one person can not do all of that even if he has all the qualities.

This means, that the idea of great team is not just technology experts, but the ability of creating a big thing out of nothing.

3) It is no secret that VC's due diligence can last 9 mohthes. Large part of the reason it happens that way is because "THEY WANT TO SEE HOW YOU PROCEED WITHOUT THEM".

ekampf,

About the team evaluation - I answered that previously.

During last monthes I am creating as many connections as I can with people who created companies, made Exits, some advise to VCs. Actually my firm has even board of advisors that is made of such people.

So my observations are made of information I get from such people, other startups - and of course my personal observations.

Of course you are right too - VC can invest even if you have minimum team. But it is a bigger risk for them (and they don't like risks) so it has to be compensated by some other factors (like working and already growing business).

In addition - raising funds has also a factor of luck.

Did you like each other (personally), is your idea is HOT right now, does this VC looked for something exactly like your startup...

# October 30, 2007 12:31 AM

kolbis said:

Thanks for the post!

By the word team, what do you mean? Do you mean for example well known and skilled personals (such MVPs)? How can the inverstor realy know them?

I can understand why they are important to me and to my success.

# October 30, 2007 8:04 AM

Vladimirv said:

kolbis,

People who created startups and made exits (especially if they were there from the beginning) - are good.

Marketing expertise - is very important.

If the startup is deep-technology based - it is important to have the best human basis for it. MVPs can be great;

if math and algorithms involved then a Dr's of Algorithms - can be great;

if you make a security product - you must have an expert in it.

But the most important is the leader - the founder. He has to breath the product and the industry (technologically or marketing).

And if the founder have managed already to gather a good team of professionals - it shows aspects of his ability to lead.

# October 30, 2007 4:11 PM

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