There are many great ideas, but not all of them can be turned into a business, you have to ask yourself, is it hot or not – the product and the sector. Does it excite me? Are these people solving a problem the world needs to solve?
Also, is the product scalable? Can it change the market? A successful business is far more than just an idea; it’s about execution and market-fit.
When looking at the team, make sure that the team is well-balanced and has the right tool sets for growth and for building out the product they sold in their pitch. A balanced team is a team that shares the strain, that complement each other because a dominating entrepreneur can also be a high risk area. If the founder has the bulk of the stock and the other 2 or three people in the team barely have 10% between them, that’s a bad position to be in. The best companies are comprised of people who prove that 1+1+1+1+1=£100 million.
“I would absolutely prefer to back a high quality team with an okay idea than a great idea but a poor quality team, because a poor quality team is not going to execute on that idea”
David Ford, Investor
The product may be great, but is it fit for market? The pressure to innovate is enormous, but it may be that your product is too early for the market, timing is key. Another thing that is needed is clarity in understanding what user value the product is bringing to the market.
Life Lessons for Investing
We have a 35 year track history in private investing, and we’ve recently distilled this knowledge into a series of Life Lessons for Investing. Filmed from the perspective of UK entrepreneurs and investors, the series provides tips and hints for EIS investing.