Whose company would you prefer to invest in — an entrepreneur with a laser focus or a polymath with a broad background? New research suggests that venture capitalists like both types of people, but whether they're more likely to choose one over the other depends on the market.
Researchers at the University of Notre Dame studied 168 startups in 95 different industries launched between 2002 and 2010. They focused on founders' "liability of breadth," which lead author Mike Mannor calls "concerns about the founder's ability to stay focused and execute quickly" which generally keep VCs from investing. "Some founders have quite broad experiences prior to launching a new business, having worked in a wide range of industries, in different companies, or in a variety of job roles," Mannor said in a press release. "Our research shows that although investors always love deep experience, they tend to be much more mixed in their views of broad experience."
That said, building and selling your company on diverse backgrounds seems to be a huge advantage in one situation: fast or turbulent sector growth. In these cases, Mannor said, "[P]otential investors love founder breadth, likely because such breadth is believed to benefit these businesses through a wider Rolodex of network contacts, a more creative approach to innovation, and the ability to identify more novel opportunities."
So, if your business is breaking new ground, investors may respond well to a thoroughly interdisciplinary approach. If you're trying to edge into an already-crowded arena, though, VCs become more skeptical and risk-averse. Either way, your experience (or lack thereof) can be a huge strength, if you know when and how to spin it.