FOUND THE RIGHTFOUNDER YET?

An idea is only as good as its creator!

Let’s ponder over that for a few seconds and see how well that fits today’s world; a world where there is no dearth of ideas, but a dearth of effective implementation that makes great and achievable. With Venture Capitalists bombarded with new concepts regularly, what makes a proposal interesting? Why should you invest in one idea and not the other? How important is implementation?

There are several questions that you as Venture Capitalists will go through before investing in a start-up, and here’s one tip we have for you — invest in founders and not just the idea. This ensures that the elevator pitch has the potential to grow substantially with effective planning and implementation. It’s an important safety net for all VCs who are looking to put their money to good use. Let us take a look at some personality traits of founders that scream “success”

Grit

Underrated and often overlooked quality, grit gives a start-up founder the very base for growth in business. You can be rest assured that anyone with grit is not afraid of failure; all they are afraid of is not achieving their end goal. A quality like this in a founder is worth investing in as they have immense resolve to achieve the best results that leads to growth in the business.

Renowned psychologist Angela Duckworth in her research on Grit, found that success doesn’t depend on talent. It depends on intensely focusing on a goal with passion and perseverance.

Elon Musk is an inspiration for entrepreneurs world over but his “failures” are an even bigger source of hope. In the year 1996, Elon Musk was ousted from his own company Zip2. The first Paypal product was voted as one of the 10 worst business ideas, in 1999. The first three rocket launches in the years 2007, 2008 and 2009 respectively, all resulted in crashes. The list goes on. However, his grit ensured that he always bounced back with even bigger successes.

Commitment

Creativity can be an abstract form of expression, but add focus and commitment to that expression and you have a way forward. It is important to know how devoted the founder is towards their idea. It is this devotion that will make or break the blueprint of the business.

If you witness any frivolity, slack, or callousness, you know this is not an investment you want to make.

Dharmesh Shah, the founder of Hubspot says here that for a startup to succeed, the founder has to be committed not just financially but also emotionally. If the startup fails, it should leave a lasting impact on the founders.

Background

Any proposal that is not backed with proper research is not worth investing in; a simple rule. It is crucial that the founder pitching an idea have some experience and thorough knowledge about the domain they wish to start the business in. Experience helps the ideation be fool-proof and education ensures that there is enough research done to promise its success.

Yourstory recently gave an interesting insight about the startup founders and their background here.The top three sectors with the most founders are e-commerce, enterprise software & tools, and fintech. In all these sectors, founders who have previous experience in similar companies have proven to be successful in their ventures.

Lifestyle

This is something which may seem unrelated to business, but it is key in understanding the founder’s personality. Scrutinizing their lifestyle helps you understand their behaviour. Will they utilize the money wisely? Are they disciplined? Do they take investments for granted? What is their credibility? While these are some personal questions of course, knowing these traits puts your mind at ease knowing that your money is not going to be blown up in personal expenses. It is not uncommon for founders to start putting investor money in unrelated businesses.

The recent dramatic fall of WeWork serves as an example of how a founder’s whims can lead to the downfall of the company.

Coachable

It is one thing to be committed and educated about your domain, but another to not be open to new ideas in the workspace. Before investing in a founder, you must look at how well they respond to feedback, criticism and even new concepts. If ideation is not welcome then there is no scope of success in a company.

Larry Page and Sergey Brin founded Google and were brilliant computer scientists. However when Google started growing faster than their expectations , they lacked the business acumen to handle the corporate growth. That is when they turned to Eric Schmidt, who helped them understand the corporate infrastructure requirements needed for Google.

Sales Acumen

A crucial trait that promises growth of business. It’s one thing to put forth a creative idea, but totally another to find a religious following for it. If a founder is able to sell their proposal, it is also to be understood that they comprehend the science of selling a thought to thousands and millions of people. Investing in a salesperson like this will only give you positive results.

Billionaire Mark Cuban famously said in an interview — “Do you know who the biggest salesperson in your company has to be? You.”

When investing in a founder, one of the other key factors is also to understand the team culture they uphold. This team will be helpful in growing the business and it becomes significant to know how the founders lead, coordinate and create space for business growth.

The CoFounders

One attribute to look into is the relationship the founders share with each other. This does not mean that they both are on the same page about each idea, but it involves understanding differences and finding the best solution. It is also to be noted that an ego-clash between two ideators is a big loophole in any business growth, so if you notice any clash which cannot be solved with discussion, they are probably not your best bet.

Team Dynamics

A company needs a reliable and efficient team to show results. Not only does this mean a good equation with the boss, but also a healthy equation with the rest of the co-workers. An environment that drives co-workers to challenge as well as complement each other’s growth is essential and a must. Healthy competition can only bring the best!

Employee Engagement

An important but often missed point about a startup is knowing what perception employees have about the company as well as the founders. According to research published in Forbes, employee engagement, recognition and feedback are some vital points in ensuring a healthy work environment for employees. It also suggested that “96% of employees believe showing empathy is an important way to advance employee retention”.

Knowing that your founders believe not just in their idea but the team that will help them execute and grow the idea is an important factor to consider. Investment is a huge step, of course, and taking a holistic approach to your investment is crucial in making sure you get the best results for your money!