Hello, this is Hall T. Martin with the Startup Funding Espresso — your daily shot of startup funding and investing.
In diligencing a startup, the team is the most critical factor in the process. Since the startup has only a nascent product and perhaps some intellectual property, the team is the only thing that you can really dig into.
For diligencing the team, first review the resumes of those who are on the team or planned to join when funding becomes available.
Placeholders of ‘we’ll look for someone later’ is a red flag. The CEO should know who they are planning to bring on.
Next, look for domain knowledge. Who has it and how current is it?
After that, look for complementary skills — is there someone who has sales skills and will spend their time selling the product?
Is there someone who is going to build the product and will manage either an internal development team or an external one?
Outsourcing the product development with no one actively managing it is a recipe for disaster.
Next, look at how long the team has worked together if at all. Ideally the team has some experience working with each other. The more the better.
Finally, look at completeness. Many successful teams follow the Designer, the Hacker and the Hustler formula. The Designer knows the customer problem and plans the product development, including how it will be monetized and promoted. The Hacker is the developer who builds the product and the Hustler is the one who sells it.
Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.
Let’s go startup something today.
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Hall T Martin is the director of Investor Connect, which is a 501(c)(3) nonprofit dedicated to the education of investors for early-stage funding. All opinions expressed by Hall and podcast guests are solely their own opinions and do not reflect the opinion of Investor Connect. This podcast is for informational purposes only and should not be relied upon for the basis of investment decisions.