Key Competencies of Startup Teams Sought After by Investors

The management team is one of the most important characteristics of a startup in the investment evaluation process. Several authors summarized and categorized the investment decision criteria concluding that the entrepreneur/team is one of the most important factors. For startupers, it is important to understand the key competencies of the management team required for a successful proposal for venture capital investment, but the empirical analysis and findings of this area have strong limitations. We defined the most important team competencies based on the literature and defined a coding system of the characteristics of the team along with several aspects and quantitatively analyzed them on the Hungarian television show called “Cápák Között” (Among Sharks). In this show, investors listen to pitches of startup entrepreneurs who seek equity investment and, after questioning the entrepreneurs, decide whether they want to invest in the company or not. In our study, we made the first step to code the most important characteristics of the management team and test the methodology of real investment decisions. We have to consider that the investors’ preferences could differ in normal business circumstances outside the TV show; however, in the show the investors made real investments in the selected companies using their own money. It is always hard when we want to analyze factors connected to personal attributes. Through this study, we made tangible some subjective factors of startup teams based on the investors’ feedback. The findings of this chapter provide a new methodology for other researchers to study the personal investment criteria.