Almost every venture capitalist I know says that the most important factor in any investment is the management. And yet how much research do we really do into the people who run the companies we back? Do we truly know them? How can we be sure the team is right?
Many entrepreneurs are naturally persuasive. They are as good at selling their personalities as their inventions and business plans. It is easy to be taken in by a promoter, as I have been on numerous occasions. Moreover, often they do not have conventional CVs, with traditional qualifications and career history. The typical indicators may well be missing – and would, in any case, be irrelevant to the task of creating a company.
Obviously someone’s past accomplishments matter enormously. Generally speaking, the best bet is a founder who has made money in previous endeavours. But there are some who embellish and lie about their true contribution, or indeed their entire past history. Investigating people is not the same as checking the title deed of a property or receiving an audited set of accounts.