Can you pass Custer?

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Your market strategy may be superb. Your revenue projections could be outstanding.

But if your psychological evaluation shows you’re not even close to CEO material, forget getting your business funded through this venture capital firm.

At Custer Capital Inc. in New Albany, an entrepreneur’s communication, leadership and management skills are so important that if they aren’t up to par — or can’t get there with minimal work — Bill Custer will walk away from an otherwise promising deal.

He’s done it more than once.

Executives at most venture capital firms observe the management team of a company seeking funds. The team is watched communicating with staff, negotiating with clients and working under pressure. The goal is to see how prepared the members are for the challenges of building a business that will sell at what investors hope will be at least 10 times their financial contribution.

Custer takes its psychological evaluations a step further. It works with Columbus-based Business of People Inc., which is built around the Gestalt theory applied most often to psychotherapy, to do face-to-face evaluations with teams in their workspace.

“We assess how the company is functioning from an organizational life standpoint,” says Business of People consultant Jerry Browning. “We do it by an interactive process. It’s not what type of personality they have, but how they function as a unit.”

“Understanding the communication skills, the visioning of the management team, that’s where the problems arise,” Custer says.

So while Custer analyzes the business plan, Business of People assesses the organization’s strengths and weaknesses. It also observes the dynamics of the leadership, vision, organizational plan, corporate identity, management structure and effectiveness of the team, along with other soft skills — nontangible things such as abilities and styles.

“We don’t say there is a right or a wrong style,” Browning says.

Yet, Custer adds: “If they ruled by intimidation, we would be less inclined to be involved in a group like that. If the troops don’t know the vision and direction, that can impede the growth of the company. Conversely, for young companies, they are so opportunistic they often lack focus. It’s critical to get them on track to know the path and not get diverted. A lot of early stage companies get off their focus.”

Using this filtering process, Custer has “elected not to work with” three companies.

“I turned them down because I knew it was going to be an uphill battle,” Custer says. “They did not have the right team to lead the company to a big, big win.”

In the case of a solid business plan with a management team with a few gaps, the team must agree to work with Business of People, Custer says. That involvement is written into the venture capital contract and Business of People becomes a management consultant for the funded company.

“You can try to size people up,” Custer says. “It’s our feeling to bring in professionals that do this. There is some real value in it. More importantly, Business of People has the ability to work with them on an ongoing basis.

“The leadership development — things that take more coaching.” How to reach: Bill Custer, Custer Capital Inc., 855-9980 or www.custercapital.com; Business of People Inc., 759-1744 or www.businessofpeople.net

Andria Segedy ([email protected]) is a free-lance writer for SBN Magazine.