We’ve interviewed a number of Dutch angel investors, and when asked what do they look for when investing in a startup, the team is always a part of the answer. We also know that the legendary investor Ron Conway isn’t looking at the idea, he’s looking at founders. Find out which 5 qualities top VCs look for in startup founders!
Must-have qualities in Startup Founders
1. Determination and Energy
It is highly unlikely that a new business or product will be profitable from the start. It typically takes about three years before it reaches some level of profitability. That is why many investors agree that determination and the energy to persevere is one of the most important qualities a founder needs in order to get through this phase. ‘You’re going to hit a lot of obstacles. You can’t be the sort of person who gets demoralized easily’, says Paul Graham, co-founder of Y-combinator.
A founder with previous experience in his industry and in the startup world doesn’t only know the nature and potential pitfalls of his market. They also witnessed firsthand how a company is built from scratch and, most importantly, how it can fail. ‘What may surprise you is that most investors respect experience with failure as much as with success’ says investor Tim Berry. ‘Most of them know what failure feels like and respect the founder who can acknowledge the failure and recognize what went wrong.’
When you start a new business with a small team, maybe only the founders to begin with, there are a lot of areas that need to be covered, such as product development, marketing and HR, to just name a few. ‘We look for folks who can: build the product (code or visual design), market & sell the product, manage & grow the team’ explains Dave McClure, founder of 500Startups. And if they recognise that they don’t have sufficient expertise, Tim Berry suggests to ‘bring in people with the skills and experience they don’t already have’.
Startups with more than one founder have significantly higher odds of success. And what investors like to see is the track record and relationship these founders have. According to Paul Graham, ‘the relationship between the founders has to be strong. They must genuinely like one another, and work well together.’ David Campbell, managing director of investment giant Goldman Sachs, appreciates if ‘the team members have worked together before to build successful technology companies, and bring a lot of experience to the table.’
5. Motivation and Drive
Last but not least, it’s not just the idea behind the new product or service that matters, but also how the founding team came up with it and will see it through. As Scott Kupor, managing partner at Andreessen Horowitz, explains: ‘It has to be something that says you didn’t just sit at a white board […] and you came up with ideas to start something. We want something that is more organic that therefore you felt compelled to build a company around a product vision you had as opposed to the other way around.’
Get to know our inspiring startups and discover what drives the founders behind them in the team presentations: