Some entrepreneurs treat the management team section of their business plan as an afterthought.
That's a mistake because venture capitalists rely on the management team section to decide whether or not to schedule a meeting.
A venture capitalist's first pass at your business plan will only last a few minutes. Count on the fact that the management team section is one of the first things they'll read because they are the quality of your company's decision makers is extremely important to them.
According to venture capitalists, here are some other reasons why your management team section is so important:
Many venture capitalists look at your management team section first.
The quality of your company's management team ranks high on investors' list of priorities. Venture capitalists know that a dysfunctional management team lacks the ability and expertise to deliver a decent ROI. Without ROI, venture capitalists are dead in the water. So rather than wasting time reading the rest of the plan, a lot of investors turn to the management section first to make sure your company has the management assets to achieve the objectives described in the rest of the business plan.
Venture capitalists look for complementary skills – but not always.
If you are an investor, it makes sense to look for a management team comprised of individuals with diverse, yet complementary skill sets. It would seem preferable to have a management team that has both a breadth and depth of business experience. But real investors understand that effective management teams are often composed of people with similar backgrounds (especially in startups.) They also understand that a mix of characteristics like intelligence, experience, commitment, and passion can be more valuable than diverse skill sets. A solid management team section highlights a range of characteristics that go beyond a simple statement of credentials.
Venture capitalists need assurances that management team members can work together.
The success of your business will hinge on your management team's ability to function as a team. Venture capitalists are cautious about funding companies whose management teams have never worked together before. Although everyone is on the same page now, problems will arise. When that happens, investors need to know that your management team is in it for the long haul and is capable of working together to get the business back on track.