Will your investors be betting on the "horse" or the "jockey"?
If your startup company is expecting to raise money from private investors or venture capital sources, a solid management team is a requirement. Your team should have key people with prior start-up experience, as well as expertise in the domain of the product and market.
Chief Executive Officer (CEO)
Venture investors will be most interested in the background and experience of the CEO. Having experience working with a Board of Directors that has included venture investors is a strong positive. For more on this subject, visit Management Boards.
In addition, the CEO must at least understand the technology to the level that he or she can describe how the product works and fits within the industry and market “value chain”. This individual must not only understand, but must be able to convey to a broad spectrum of interested parties, the relevant business/revenue model, as well as all significant financial aspects associated with the overall business that is being established.
And, the CEO (and his entire team for that matter) should also adopt the philosophy, and convey their intention to structure and operate a lean company. Investors will want to have confidence that the CEO will be a prudent financial manager.
For more on this subject, visit Post-Funding.
Chief Technology Officer (CTO)
The CTO is another essential team member in the startup phase. This individual is the technical expert and is responsible for delivering the product envisioned.
In the medical products industry it is important that this individual understands (or quickly hires someone who understands) the documentation requirements that cover the product development phase, as well as those regulatory requirements for manufacturing, quality control and marketing of the product.
For more on this subject, visit Design Controls.
Business Development & Marketing
The point at which it becomes important for these management roles to be filled (often by a single individual) will vary significantly, but frequently is dependent upon the past experience of the CEO.
If the CEO does not have a strong experience base in the market you will be entering, it is important that someone with upper management experience in sales management and/or marketing within the relevant product and market area be brought into the team (or hired as a consultant) to guide product development from a customer needs perspective.
For more on this important aspect, visit Customer Needs.
“Happiness … is your own team.” This is an old expression that can apply to many scenarios, but certainly applies to a startup CEO regarding the building of a management team, and even to a Board of Directors.
It’s very satisfying to be able to include those with whom you have worked in the past, and with whom you are comfortable. However, you owe it to all involved (including investors) to be sure each member of the senior leadership is highly qualified for their position.
And, give significant consideration to how these early management members will work with one another. Good team dynamics is always important in an organization, but is even more critical in the startup phase when a small number of people are working long hours, “wearing multiple hats”, and are dependent upon one another to step up and fill the gaps that will exist until more hiring can take place.
The selection of key management is an early, highly visible indicator of the CEO’s judgement...
Therefore, expect potential investors to conduct some level of diligence around the background of your senior team members.