Do investors provide business finance to ideas or the people behind the idea? An interesting questions and certainly one that has received much debate at a recent networking meeting between business angels and entrepreneurs in Johannesburg. Most investors would tell you that it’s the idea that they are interested in but if you look at the ideas who receive investment and the people behind them its often easy to identify why one idea received funding and another, not.

In our business plan workshops I often make this point very specifically to the attendees that a key are of the business plan will be the people who are behind the business. You are as much selling the entrepreneur as you are selling the actual opportunity. Take it as you which but the fact is that deals are done between people. Yes the idea may be a great one but as the investor I’m looking at the person who I will be working with, what are their qualities, are they someone who can take guidance, are they argumentative (not always a bad thing by the way), are they creative, do they have contacts. All these issues have to come into play.

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An age-old adage from investors and entrepreneurs is they’ll always take an “A-quality person with a B-quality idea”, and not the other way around. This means I’ll happily invest in a person or team I believe can produce a successful business.  The business idea itself?  Less important.

Because whether you realize it or not, business is all about things like execution and the ability to adapt to change.

Bad Investments
Ask most business angels about their mistakes and the answer is usually people-centric.   They regret or focus on investing in the wrong person, not the wrong idea.

Look at these key characteristics of a successful business relationship.  Each is crucial to a profitable and enjoyable experience, long before any amount of Rands are made or lost.

Believability, Trust,  Communication,  Leadership,  Determination, Creativity. These plus the aforementioned Execution and Ability to Change are what make a business successful over time.

As an investor, you want the opposite of the guy who’s chasing a lifestyle business.  You want the most determined business leader you can find to lead your investment to the promised land of a profitable exit.

Why Does the Idea take a Backseat?

Because most businesses start off doing one thing, only later to figure out what really works.

It’s more about talent, determination, and adaptability to change than the multi million-Rand idea.  Surely you are clear about this.

So yes of course as an entrepreneur you need to focus on your business plan, and as the investor you consider the break even point and growth opportunity of your investment but these need to go hand in hand with a workable relationship that can strengthen the ability of the idea to be a winner.