This argument is getting trite for those of us who’ve been around for a few years. We’re always asked the question, and almost always have the same answer. Let me explain it to those newer to the game or curious about our attitudes. Early-stage investors have been arguing over this for years. Do they bet on the entrepreneur (jockey) or the business idea and plan (the horse)? This is serious stuff. If you are looking for money, this question will certainly come up in one form or another when you approach professional or organized angel or VC investors.
A more complex answer
My answer always varies as I examine each deal, sometimes deferring and passing on an investment because of an uneasy feeling about the entrepreneur, even if the business plan seems able to capture the market. Speaking for others, I see VC investors jumping into deals knowing that soon they will push to replace the entrepreneur with a professional, experienced manager that the VC has vetted and trusts.
Sometimes there’s a real surprise after the fact
I have bet on the entrepreneurial jockey numerous times and been blind-sided by after-investment behavior that completely reversed my opinion about an entrepreneur’s ability to manage growth to breakeven. Other times, the entrepreneur went on to assemble a great team and execute the plan as it inevitably changed again and again.
Although this debate will continue for ages, I tend to fall on the side of betting on the jockey, simply because it has been a rare business plan that did not change again and again seeking a successful model in the marketplace. And great management can morph a company to adopt without destroying the culture of the company in the process.
What if you see a great idea but no team to execute?
[Email readers, continue here…] What if you were the investor and someone walked into your office handing you a business plan executive summary that floored you with its brilliance? And what if that person admitted immediately that he or she had no team and was not the person to take this plan to market? Would you, as an investor, plow money into the plan and help to incubate the idea into a real enterprise? I would not, nor would most all of those I co-invest with. There are millions of great plans that failed over the years for want of a great management team. And I am sure there are many, many average plans that developed into great companies with the help of a great team.
Concentrate on a world class team
So, if you are one of the entrepreneurs without experience or ability to take your great plan to market, admit this early and form a team that investors can trust to do this, personally stepping into a position that fits your core skills, be it marketing, sales, development, or other areas required by a young company.
It would be refreshing as an investor to meet an entrepreneur with a great plan and a pre-formed management team fronted by the strongest possible leader, even if the entrepreneur offers to take a back seat to make the vision a grand reality.
Images created using DALLE-e 3 AI, using prompt: “A realistic image of a single horse facing a jockey with question marks above the heads of each. Image located on a racetrack with colorful grass, and mountain background, much as Santa Anita racetrack.”
