Investing Into Entrepreneurs More than Ideas/Products?

I’ve seen it many, many times where investor(s) invest into an idea because they have some belief in the idea/product but more belief in the entrepreneur(s) behind it. This isn’t to say that investors/angels just throw money down on worthless ideas/products simply because of the person behind it. Rather, it’s the person/entrepreneur behind the pitch that can make or break a deal. Obviously, numbers are very important: market size, sales, profits, debt, customer base, etc. However, many times, a venture can be very early in its lifecycle or the numbers can be good but assurance is needed in the individual calling the shots and steering the ship on its course to expansion and financial success.

Companies like Upstart are working to invest in entrepreneurs or individuals who have the potential to become successful entrepreneurs – rather than the startup itself. Additionally, the new trend in crowdsourcing is allowing non-traditional streams of cash for startups/entrepreneurs seeking to build their ideas into a reality and prove themselves at the same time.

You’ve probably seen cases where the idea/product is good but the person behind the helmet doesn’t have the leadership ability to fulfill the potential of where the business can go. In these cases there are sometimes offers to buy-out the entire company or give the initial entrepreneur some sort of royalty while investors take control of the company and put someone else behind the helmet. You’ve likely seen these scenarios play-out on the reality investor-pitch TV shows.

The key take-away here is that the opportunities are there for entrepreneurs to get funding and have a shot at success, but, even if the idea/product is good, the founder(s) or entrepeneur(s) are the most important part of the success equation.