Law & Taxation mentor Richard S. Morse Jr. responds:
The venture capital firm will conduct reference checks on the management team, because the venture capitalists are most likely betting on the management team more than the technology or the market being served. Suppose you line up a group of venture capitalists and offer them three choices:

  1. A terrific management team that has worked together in the past but doesn't really know what it wants to do yet and doesn't even know what market to pursue
  2. A hot technology field with a founder who has never run a business before
  3. A vast, untapped market -- for example, China -- that a novice CEO is trying to break into.

In my experience, 99 times out of 100, the venture capitalists will choose option 1, the terrific management team. That is because -- particularly in this fast-moving Internet and telecommunications world -- markets open and shut quickly and technologies grow and become obsolete quickly. But a good management team, composed of executives who have done it before and have worked out the kinks in their relationship, will nearly always win. I think a single neophyte founder, without a tested management team and with only a great idea, is probably not going to get funded, at least not by the top-tier venture capital firms.