Cover of Catch-22
One of the most frequently asked questions from entrepreneurs is "How can I approach Venture Capitalists without a complete management team given that the VC's value management teams highly in their decision and I need VC money to recruit that very management?". Which the prompts the follow on question, "Isn't this a 'Catch-22' situation?".
They are good points. For early stage investors, this is a commonplace dilemma.
My answer is that a VC needs to hear three things from an entrepreneur. They are what the entrepreneur knows to be true, what he believes to be true and what he doesn't know.
First, what the entrepreneur knows. This is the domain expertise that embodies the entrepreneur's unique point of view on an industry and the opportunity. For example, ten or twenty years in any industry provides perspective and insight into the market and its unmet needs.
Second, what the entrepreneur believes. This is the essence of the entrepreneur's vision about the possibilities associated with the application of time, money and resource to aforementioned market opportunity. The entrepreneur can lay out a view of investor money, recruited talent, product development, marketing launch and company grow based upon the current conditions and investor involvement.
Third, what the entrepreneur doesn't know. This frames the questions that time, money and resource will answer. Will customers accept this new approach? At what price? Can we compete? What will others do?
All of which is to say, early stage investors don't need companies to be completely staffed. They need entrepreneurs to be powerfully self aware of the things they know, believe and don't know. In that context, everybody can be on the same team going forward.