We've partnered with some of the most innovative startups in Europe at early Series A level and one common pattern we've noticed as professional (ICF) business coaches is the importance of the Founding Management Team - it's all about the team, team, team and understanding the “founder-market fit”.
In a recent June 23' report 49% of investors say the management team is the most important factor venture capitalists are considering, when deciding whether to invest.
Overall, the data from the last decade paints a consistent picture and a common mantra among VCs, particularly about early-stage funding, is “Invest in people, not in businesses.”.
"On this, European and American VCs are aligned. Especially for early-stage investors, the founding team is by far the most important decision factor. In a survey of 437 European investors, 49 percent of VCs state a startup’s management team is the most important factor to determine their decision to invest"
Scaling up a start-up is no easy feat. It requires a significant investment of resources, a clear understanding of the target market, and a solid go-to-market strategy.
From our lived experience of working with entrepreneurs and research on startup failures, one of the most important elements of scaling up a start-up is building the right team.
For the investors, would you rather invest “in a grade A team with a grade B idea than in a grade B team with a grade A idea”?
What makes a successful startup team? What do we mean with building the right team?
A team-oriented scaling strategy can help ensure that your start-up has the necessary skills and expertise to grow and succeed and a professional team coach can provide ongoing accountability and follow-up, helping you stay on track and make progress towards your goals.
Much has been written on the Top management teams characteristics link to firm performance; VC methodologies or assessment tools from investors ...etc
In this article, we want to focus on a few deal breaker business coaching themes we have experienced over the year and outside of technology assessment:
One of the key elements of a team-oriented scaling strategy is defining the team structure and roles:
This includes identifying the key positions that need to be filled and outlining the responsibilities of each role. This will help ensure that everyone on the team knows what is expected of them and that there is clear accountability. In our field we call this Organisational Role Analysis (ORA Coaching)
– Finding, Making and Taking one’s role -
How do you determine what roles you need as you grow your business?
How can you Find, Make and Take your role within the senior executive team and manage your functional expertise at the same time?
2. Establishing clear communication and collaboration protocols is also essential.
This includes setting up regular team meetings, establishing a shared communication platform, and encouraging team members to share ideas and feedback. This will help ensure that everyone is on the same page and that there is a high level of collaboration and teamwork. We often see a lack of strategic retreats from our early-stage startups clients with unbalanced tactical, transactional weekly meetings. A professional team coach can help the team identify the root cause of problems and challenges, rather than just addressing symptoms.
3. Creating a shared vision and goals for the team is also important.
This includes outlining the company's mission, values, and objectives, and ensuring that everyone on the team understands and is committed to achieving these goals - it's a living document and not static. This will help keep everyone focused and motivated as the startup scales up. McKinsey in their Oct 22 article "How to build a unicorn: Lessons from venture capitalists and start-ups" talk about the 5 Ts - Team / Technology / Traction / TAM (Market) / Timing.
4. Establishing a performance management system that encourages teamwork is also essential:
This includes setting clear performance metrics, providing regular feedback, and recognizing and rewarding team members for their contributions. This will help ensure that everyone on the senior team is working towards the same aligned goals and that there is a high level of motivation and engagement. Tools such as OKR/KPI are great for this and a team coach can take a more customized approach to working with the team, considering the team's individual strengths and weaknesses, as well as the specific challenges the team faces.
5. Developing a continuous learning and development program for the team is also important:
A team coach can work with the team on an ongoing basis, adjusting the coaching and feedback to the team's specific needs and goals by supporting regular feedback, and encouraging team members to share their thoughts and suggestions. The learning measurable outcome will foster a culture of trust and transparency.
Implementing a team-oriented scaling strategy is an ongoing process. It's important to continuously evaluate and improve the strategy to ensure that it remains effective and relevant. A professional team coach can help the team to continuously evaluate and improve their approach, ensuring that the team-oriented scaling strategy remains effective and relevant.
It's worth noting that the best approach can be a combination of all of the above or a professional team coach (i.e. ICF ACTC) working with a long-term VC advisor can provide a comprehensive and effective approach to scaling up a start-up.
BC Team business coaching services include providing strategic guidance on navigating the business landscape, accelerating the development of products and services, and optimizing operations. We also provide access to investors and venture capitalists who can provide resources and capital to help businesses scale quickly.
How Venture Capitalists Make Decisions HBR, March–April 2021
A contextual examination of new venture performance: entrepreneur leadership behavior, top management team heterogeneity, and environmental dynamism - Journal of Organizational Behavior 2007