3 Critical Things to Look For in an Entrepreneur Before Investing

NEW YORK (TheStreet) -- When it comes to picking which start-ups to invest in, there is one key metric that trumps all: Who is running it? 

A great team will take a bad idea and turn it into a viable business. Inversely, a bad team will destroy a great idea overnight. This is why it's important to pay more attention to the founders and teams of start-ups than the idea itself. 

But what kinds of start-up entrepreneurs will be successful? Here are a few key things to look for:

1. Previous experience is important but not a deal-breaker.

We all have a beginning -- experience is very important because it lowers the risk for execution, but there are a lot of traits that an entrepreneur is either going have or isn't: passion, intelligence, drive, ability to inspire, vision, and so many others. Someone can have all the experience in the world but if they don't have these intrinsic qualities then pass.

2. Vision for the company.

Starting on day one, an entrepreneur has to have a vision for the company and understand who the customers are. If they're worried about an exit or how much money they're going to make if their company becomes wildly successful than they're most likely not going to create anything of value. All of that will fall into place if a start-up founder understands who the customers are and has a product that delivers value to those customers.

3. Personality markers that make an entrepreneur fit to lead a business.

There are three main traits in an entrepreneur's arsenal that are crucial for them to exhibit before investing:  

  • Intelligence: How well do they know the space? The competitors? The problems they're up against? Are they getting into this business because the funding is flowing and they knew a guy who knew a gal that raised a massive round? Some companies need a technical leader. Others need a business-savvy one. A good company will have both, who work together interchangeably. Knowing the ins and outs of the business idea and how it fits into industry landscape is critical.
  • Persistence: I'm a hustler by nature. I get my thrills by building relationships, connecting the dots and helping startups get deals done through my company FlashFunders' platform. I expect entrepreneurs I invest in to show the same dedication to their mission with little resolve. Building a business is really tough -- 90% of success is showing up.
  • Inspiration: This trait should unveil itself in two ways. The entrepreneur you're evaluating should be inspired by their ideas. Tony Hseih, CEO of Zappos (which was acquired by Amazon (AMZN) in 2009), once noted, "Chase the vision, not the money; the money will end up following you." Entrepreneurs must be inspired to chase their visions for reasons beyond money. In parallel with this, entrepreneurs must have the ability to inspire others and their teams.

Using this entrepreneur evaluation checklist will hopefully help you invest in great people that build successful companies.

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.

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