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Why would investers tend to favor a new business led by a management team over one headed by a lone entrepreneur?In: Business Plans |
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Investors Like Management Teams
Good question. In some circumstances a lone entrepreneur might seem like a more favorable (lower) risk investment, i.e. no division of authority in decision-making, single individual to communicate with to resolve problems, etc. In actuality it has been proven time and time again, business that are run by professional managers make more moderate, predictable and reliable decisions. These decisions take into account many things an entrepreneur, thinking, displaying and acting with only one voice, would not. The investors, with 100's to 1000's of businesses to select from each to invest their money in, are not going to entertain business that do not respect management enough to form a team of professional managers. As a result the risk for entrepreneural investment is far too high.
First answer by ID1198099338. Last edit by Crystal. Contributor trust: 1456 [recommend contributor]. Question popularity: 67 [recommend question]
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