Investors Want a Strong Management Team

I read an article on Inc.com’s website that I thought it was interesting. (I’m an Inc. subscriber so this happens often but usually it’s not significant enough for me to want to share as I do this.) Ashton Kutcher says he invests in management teams. Go figure! That’s what I repeatedly tell people investors seek. A strong management team. If you view any of my financing presentations on youtube (under TiffanyCWright), you’ll see that I nearly always include a slide about what investors want. A strong management teams is at the top of the list.

A great management team can take a mediocre idea and build a really good company. A mediocre manager team can kill a great idea and a drive  a company nearly into the ground. Here’s the excerpt from “Would Ashton Kutcher Invest in You” by Nicole Carter (to read the rest of her comments on other topics, click on the highlighted link.)

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“Would Ashton invest in you? Ashton Kutcher took the stage at TechCrunch Disrupt. Interviewer Charlie Rose asked him how he decides which companies to invest in. Kutcher, the actor-and-media-company entrepreneur who’s invested in Hipmunk, Blekko, Path, and others, said he doesn’t care at all about market potential (“I’ve become immune to people talking about market cap,” he says). Rather, he’s looking for a strong team working extremely hard to fill a need. (My bolding.) A good indication of future success, he says, is when founders are working hard to keep servers from crashing at the start.”

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Obviously this was an article excerpted from a tech-focused publication, as Mr. Kutcher is impressed by servers not crashing. Put another way, he means he is impressed by founders – or management teams – who are focused on building a company that’s structurally prepared for significant growth from the outset. And that’s another reason why I so like this excerpt.

Inventors come up with great ideas all the time but rarely do those ideas become companies. Why? They are great at innovating but do not know how to translate that into a viable, sustainable enterprise. Shucks, the overwhelming majority of inventors have no idea what the first step is in building a business. Yes, typically the founders do most of the work…but they prepare for growth by documenting what works well then handing off those tasks and that documentation to incoming employees. Or they bring in employees and work with them to figure out what works well and have the employees document that. See the pattern? If you want to grow, you have to put the infrastructure in place to support that growth. And a lot of that involves a good management team who will help you, as the owner(s) or founder(s), identify what’s needed…and fill it.