BUILDING A NEW VENTURE TEAM

A new venture team is the group of founders, key employees and advisers that move a new venture from an idea to a fully functioning firm.


Liability of Newness as a Challenge

Liability of newness, which refers to the fact that companies often falter because the people who start them aren't able to adjust quickly enough to their new roles and because the firm lacks a "track record" with outside buyers and suppliers. Assembling a talented and experienced new venture team is one path firms can take to overcome these limitations. Another way entrepreneurs overcome the liability of newness is by attending entrepreneurship-focused workshops and events. Another route to overcoming the liabilities of newness is joining one of the growing number of start-up accelerators that are popping up across the country.

Creating a New Venture Team
The key to success is not the idea but rather the ability of the initial founder or founders to assemble a team that can execute the idea better than anyone else. The way a founder builds a new venture team sends an important signal to potential investors, partners, and employees. The way to impress potential investors, partners, and employees is to put together as strong team as possible. 

The Founder or Founders

Founders' characteristics and their early decisions significantly affect the way an entrepreneurial venture is received and the manner in which the new venture team takes shape.
🙋 Size of the Founding Team
Studies shows that 50 to 70 percent of all new firms are started by more than one individual. Team members can easily differ in terms of work habits, tolerances for risk, levels of passion for the business, ideas on how the business should be run, and similar key issues. If people have worked together before and have decided to partner to start a firm together, it usually means that they get along personally and trust one another. They also tend to communicate with one another more effectively. A founding team larger than four people is typically too large to be practical causing communication problems and an increased potential for conflict.
🙋 Qualities of the Founders
One reason the founders are so important is that in the early days of a firm, their knowledge, skills, and experiences are the most valuable resource the firm has. The results of research studies somewhat consistently suggest that prior entrepreneurial experience is one of the most consistent predictors of future entrepreneurial performance. Entrepreneurs with experience in the same industry as their current venture will have a more mature network of industry contacts and will have a better understanding of the subtleties of their respective industries. Founders must often "work" their social and personal networks to raise money or gain access to critical resources on behalf of their firms. Networking is building and maintaining relationships with people whose interests are similar or whose relationship could bring advantages to a firm. 

The Management Team and Key Employees

One technique available to entrepreneurs to help prioritize their hiring needs is to maintain a skills profile which is a chart that depicts the most important skills that are needed and where skills gaps exist. New ventures use four different sources of labor to get their work done.
⇾ Full-or-part-time employee : someone who works for a business, at the business's location, utilizing the business's tools and equipment and according to the business's policies and procedures.
⇾ Intern : a person who works for a business as an apprentice or trainee for the purpose of obtaining practical experience.
⇾ Freelancer (or contractor) : a person who is in business for themselves, works on their own time with their won tools and equipment, and performs services for a number of different clients.
⇾ Virtual assistant : a freelancer who provides administrative, technical or creative assistance to clients remotely from a home office.

The Roles of the Board of Directors

Board of directors is a panel of individuals who are elected by a corporation's shareholders to oversee the management of the firm. Three formal responsibilities of board directors are appoint the firm's officers, declare dividends, and oversee the affairs of the corporation. People who do not work for the firm are usually more willing to scrutinize the behavior of management than insiders who work for the company. Two ways a board of directors can help a new firm get off to a good start and develop what, it is hoped, and will become a sustainable competitive advantage :
⤥ Provide Expert Guidance
Although a board of directors has formal governance responsibilities, its most useful role id to provide guidance and support to the firm's managers.

"Directors share their expertise and wisdom as a matter of course, As they do, management and the board learn together, a collective wisdom emerges, and managerial judgement improves." -Ram Charan-

⤥ Lend Legitimacy
Well-known and respected board members bring instant credibility to the firm. When a high-quality individual does agree to serve on a firm's board, the individual is in essence "signaling" that the company has potential to be successful. Investors like to see new-venture teams, including the board of directors, that have people with enough clout to get their foot in the door with potential suppliers and customers. Board members are also often instrumental in helping young firms arrange financing or funding.

Rounding Out the Team: The Role of Professional Advisers

Board of Advisors

Some start-up firms are forming advisory boards to provide them direction and advice. Advisory board possesses no legal responsibility for the firm and gives nonbinding advice. A board of advisors can be set up to address a specific issue or need. The most important thing that advisory board members can do is make high-level introductions to early customers, suppliers, and business partners. Several guidelines are followed when organizing a board of advisors :
↬ a board of advisors should not be organized just so a company can boast of it.
↬ a firm should look for board members who are compatible and complement one another in terms of experience and expertise.
↬ when inviting a person to serve on its board of advisors, a company should carefully spell out to the individual the rules in terms of access to confidential information.

Lenders and Investors

In fact, the institutional rules governing banks and investment firms typically require that they monitor new ventures fairly closely, at least during the initial years of a loan or an investment. Evidence suggest that an average venture capitalist is likely to visit each company in a portfolio multiple times a year. This number of visits denotes a high level of involvement and support. Lenders and investors also work hard to help new firms fill out their management teams. Research evidence rather consistently suggests that the presence of bank loans is a favorable signal to other capital providers. Bankers provide operating capital rather than large amounts of investment capital to new firms.

Other Professionals

Consultants

A consultant is an individual who gives professional or expert advice. The role of the general business consultant has diminished in importance as businesses seek specialists to obtain advice on complex issues such as patents, tax planning, and security laws. Those leading an entrepreneurial venture often turn to consultants for help and advice because while large firms can afford to employ experts in many areas, new firms typically can't. Consultants fall into two categories : paid consultants and consultants who are made available for free or at a reduced rate through a nonprofit or government agency.