When Human Capital Leads to Venture Capital

So, you need cash. And congrats, you have successfully managed to get a bunch of meetings on the books (no small feat!). You feel good about the numbers, the market opportunity, traction, competitive landscape etc. That’s all great. 

What about your team? VCs invest in teams. Invest in Founders. Great ideas and poor execution go nowhere; mediocre ideas with great execution have a chance. 

So, what or who do investors take a bet on? Strong Founders/CEOs, leadership (yes, leadership is more than execution and investors are looking to mitigate execution risk – but true leadership means building a team and an environment that supports superior execution), teams that are committed when it gets rough, that work together well, that have the necessary expertise, and are agile and can pivot when necessary.  

Hire the Right Team

I talk about this often. Leadership is about hiring the right team, putting together the right set of skills -- skills that complement what you as a leader bring to the table. You need skills and experience in the specific functions that are key to your business model. VCs notice when a key person is missing from the team. For example, if success depends on business development (customer relationships and partnerships) and you have all technical people on your team. 

Yes, there is a chicken and egg problem. At very early stages, you are likely raising money to hire the skills you need. If they aren’t on your team yet at least make sure you can clearly articulate your hiring plan, both the skills and the values or personality of your ideal candidate. 

Positive Team Dynamics

How does your team interact? As a leader are you a one-man show? How well do you delegate? Do you believe in your team? Do you overshadow or belittle your team? How are you structured – too many people in overlapping roles – CFO, COO, CEO, President – causing confusion, inefficiencies, and bottlenecks?

It’s ultimately a question of culture. If an investor is giving you the money you need to scale, to go from 20 to 200 employees, they know that the culture you have built will impact the team’s ability to execute when a company is ramping up. Negative behaviors, norms, or habits, communication styles have you developed as an organization will multiply crippling performance. 

Mission

Are you truly mission driven? You should care deeply about the problem you are solving. Maybe you have experienced the pain point you are solving for? If you have a personal story – tell it. 

Investors want to believe that you are committed to your vision for the future and helping the people you serve. You aren’t in it for the money. Because at the beginning there is very little money, so you better believe in the mission when it gets really hard – which it will time and time again. 

You better have engaged your team around your mission, so they are equally committed and passionate? Engaged teams take you beyond the original vision.  

A Compelling Character

As the public-face you need to convey something unique and special. Your presence and the way you tell your story will help you not only raise money, but investors know it means you will be able to attract top talent, sell to your customers, build strategic partnerships, and engage the public and press. 

It all comes down to the story you tell and how you tell it. You have to sell your vision of the future as many won’t be able to see it. Maybe you work with a coach that can help you deliver it in a way that resonates with investors, definitely practice your presentation, role play, and ask for feedback from VCs if they pass.  

The question you might be asking is how do investors assess all this through their questions, meetings with teams, and office visits? It’s hard and much of it is intuition and practice. What can you do? Make sure you step into the role of a true leader, put together an A+ team and, then find ways to show investors who you all are and how you do what you do better than anyone else. You can send them all the facts in your pitchdecks but what comes across from you and from your team in person is what matters.