Editor’s note: “The Angel Connection” is a regular feature in WRAL Local Tech Wire. LTW asked consultant Bill Warner to share advice for entrepreneurs seeking venture capital investment. He is chairman of the Triangle Accredited Capital Forum, an angel investor network with over 100 members throughout the Southeast. The Angel Connection is published weekly.

RESEARCH TRIANGLE PARK – The most important factor an angel investor considers when deciding whether or not to invest is the quality of the management team.

When it comes right down to it, the investor has to trust that the management team is going to be able to achieve the objectives cited in the business plan and that they will manage the company’s money wisely. If that trust is not there, the investor will pass on the deal, no matter how good the opportunity looks.

What Investors Want in a Management Team

It is most desirable if the management team has some basic characteristics that give investors confidence that the company is in good hands:

• Investors are very interested in companies that are being founded by people with entrepreneurial experience, particularly if they have had successful exits that made their previous investors a lot of money. Having run or been part of a previous start up company indicates that the management team knows how a start up has to be run. They will know how a team is supposed to pull together, what the top priorities are to launch the company and how to manage cash. Investors will be hesitant to work with a management team that has not experienced the start up environment for fear that too many mistakes might be made. The more people with start up experience the better.

• Business management experience is always a plus for investors. If the CEO of the company has actually run a business where operational and financial matters were being handled, the investors will be more comfortable that the business will be managed properly. In addition, if the management team has relevant business contacts that would potentially lead to customers, suppliers and alliances, the investors will have more confidence that the company will readily achieve operational traction.

• Relevant industry experience is important. Having worked in the industry that your new company is in means that you know the trends, ecosystem and probably a lot of people that are going to serve you well as you try to get sales traction in your new business. Investors know that a management team that has the right instincts about the business means that better judgments are going to be made.

• If the management team has worked together before, investors will see that the management team will be more cohesive and will not have the usual growing pains of getting to know how to work with each other. This means that fewer mistakes will be made and the management team already knows how to complement one another.

Show Your Stuff

Modesty in talking about the qualifications of your management team is not a virtue when talking to potential investors. Be prepared to explain the positive characteristics of the team that is going to execute the business plan and be proud and excited about the possibilities of them succeeding. Your potential investors will be impressed that your team is optimistic and prepared to act in the best interest of the company.

Bill Warner is the Managing Partner of Paladin and Associates, a business consulting firm in the Research Triangle Park area of central North Carolina, and is the Chairman of the Triangle Accredited Capital Forum, an angel investor network with over one hundred members throughout the southeast.