Serial entrepreneur and investor Pam Springer says the things she finds important before investing in a business are understanding the market, the business model, how much experience the entrepreneurs running the business have, and the plan to commercialize the entity, especially for early-stage companies.
For later-stage companies, it’s often about co-investing with investors who can bring not just capital to bear but also intangibles such as a network and connections — anything beyond capital that can bring value to the entity.
But one of the first things she always looks for is the strength of the team. Regardless of the stage in the company’s lifecycle, a strong team is critical to scaling and success. And for her, a lack of strength can suggest some significant issues.
“If it’s not very strong, I typically think, ‘micromanager.’ And that’s detrimental to scaling,” says Springer, who spoke at the Columbus Smart Business Dealmakers Conference. “It typically also means the founder or the CEO acts too much like a general and hires a bunch of lieutenants. So what you want is a strong team that can scale, that can really dive into areas, especially as the business grows, that now need to perform better and have that committed resource to do that and build a team around them to continue to improve.”
Managements teams should also have grit, an ability to establish a culture and enough focus to not get distracted. It’s also preferable if there are customer referrals that say the company’s product delivers on its promise.
“Ideally, the product pulls people in, as opposed to people having to go out and really hard-sell the thing,” she says.
Springer talks more about how to be an effective investor, as well as the lessons she learned from selling her cloud based enterprise software business, Oris Intelligence, when she spoke at the Columbus Dealmakers Conference. Click on the video about to check out the full conversation.