Editor’s Note: Recently, we’ve been telling StreetAuthority readers about how the recent loosening of regulations make it possible for regular investors to buy in to some of the most exciting companies in the world — before they go public. 

In recent issues we’ve talked a lot about the concept of pre-IPO investing itself — how it works, and the promise it holds for investors. But what happens during the research phase when you find an interesting startup that seems to hold a lot of promise? 

One of the most important next steps is to assess the people behind the enterprise.

In the following essay, Joseph Hogue, Chief Strategist of Pre-IPO Millionaire, draws on his years of experience as a venture capital analyst to highlight what he sees as the five most important qualities of a successful entrepreneur. It also demonstrates the value of having an experienced analyst working for you in this space. After all, if you want to invest like an elite venture capitalist, why not have an experienced VC analyst working for you?

They say you can’t judge a book by its cover, but you can tell a great deal about an entrepreneur from a very short conversation and a peek through offer documents. Whenever I talk to entrepreneurs and management about a startup investment, I look for certain qualities to come out that point to the type of person they are, and their ability to be successful.

Passion — Starting your own company is a rough road… strike that, this road has three-foot deep potholes! An entrepreneur needs to have unshaking faith in their idea and the passion to see it through even if it never leads to fame and fortune. If the entrepreneur can’t say that this is what they would be doing if money was no issue, then I won’t be investing in the idea.

Commitment — I used to have a desk calendar that said, “Always Give 100% at Work,” before listing the days with different percentages that would add up to 100% for the week. Being a successful entrepreneur isn’t something you can do when you feel like it. It’s day-on, stay-on until the business is large enough to run by its own momentum, which is usually at least several years down the road. 

Startup and Operational Experience — I want to know that an entrepreneur understands the unique risks and challenges of starting a company from scratch. How difficult it is to get the word out and get any momentum in sales. I also want to know that the entrepreneur understands how companies in the industry operate. My favorite entrepreneur is someone who has worked for another employer for a few years, excelled at their job but then set off with their own idea and company.

Analytical Skills to Balance Qualitative — Maybe this is because I am such an analytical person, but I see too many entrepreneurs with no idea (or no realistic idea) of how to really analyze the quantitative aspects of their business. It’s great that they have the passion for the product and understand customer needs but I want to see an entrepreneur that can critically think through their business from pricing to operational costs right down to the bottom line. 

Ability to Sacrifice — This may not be so much something the entrepreneur says, but rather reflects all the other factors in their life. Every entrepreneur will sit there and tell you they are willing to work 24-7 on the business, but their willingness may run head-on into their ability. Do they have young children? Do they have enough cash set aside to pay bills for at least a year without much coming in from the business? Do they have a spouse that is just as committed to their success and willing to concede most of the entrepreneur’s time to the startup?

This last quality is why many investors will only fund companies run by younger entrepreneurs without a family or large monetary responsibilities. Entrepreneurship isn’t exclusively a “young person’s game, but it is a 24-7 challenge — management had better be ready for it if they want my investment.

#-ad_banner-#A lot of investors will tell you integrity is the number one quality they look for in an entrepreneur. Certainly if anyone on the management team has something in their past or if they say anything during interviews that makes me question their honesty, I’m out the door immediately, but it’s difficult to judge someone’s integrity without really getting to know them. 

The best you can do is to ask a lot of detailed question’s in management interviews and make sure answers correspond well with previous replies. It’s the best way to make sure management isn’t changing their story.

Crowdfunding to the masses is still developing and I have a feeling it’s going to be difficult for regular investors to get time with most CEOs or company management. That’s where I come in to pressure management for an interview before highlighting their offer in my newsletter.

It’s just one of the reasons why I created Pre-IPO Millionaire with StreetAuthority: To help guide regular investors who are new to this space through the ins and outs, so to speak, so they can enjoy the same kind of stellar triple-digit-plus returns wealthy elite investors have enjoyed for years.

If you’d like to learn more about pre-IPO investing and how my newsletter can help accomplish this for you, simply follow this link.