How should investors evaluate founding teams?

Our attempt to answer one of VC’s trickier questions


Spontaneity can have its downsides

One of the traits we measured was whether an entrepreneur is an “originator”. An originator is creative and spontaneous — they make decisions quickly and decisively. Investors often consider these qualities a strength. But we found that being an “originator” was the trait most negatively correlated with success — what’s more, this negative correlation held true in the founder’s self-reflective surveys and the team surveys. The takeaway: this decision-making style can be great for initial idea generation, but less useful when it comes to execution. The most successful businesses in the study had founders that were focused, calculated, and deliberate.

Concern for people can actually be a negative trait

This was another surprise, given that compassion and consideration are typically regarded as strengths in leaders. Our survey found that the trait of “people-focus” — a perceived level of concern for others — was negatively correlated with success. One hypothesis is that overly “people-focused” leaders possess a strong need to be liked by others and tend to be overly considerate. This can result in failing to enforce rules, guidelines, and deadlines.

Self-awareness is critical

Since we surveyed both founders and members of those founders’ teams, we were able to compare the two viewpoints. We found that our most successful companies had a very aligned understanding of one another’s traits. The smaller the discrepancy between the founder’s self-awareness and his/her team’s perception of the founder, the higher the firm’s performance. From my experience, an early startup is never going to have the perfect balance of traits, but it is incredibly important that the team is in sync with each other so they can collaborate without a great deal of friction.

Teams with a female founder perform more strongly

This is more of a meta-finding (gender isn’t an implicit “trait”), but the results were too clear to leave out. Women-founded companies performed stronger in nine out of ten of the categories we measured of subjective and objective performance. This means they are outperforming companies with only male founders in YoY and LTM Revenue, Funds Raised, and company-specific objective and subjective goals (this aligns with lots of other research).


Village Capital

Blog for Village Capital. We're reinventing the system to back the entrepreneurs of the future - a future where business creates equity and long-term prosperity.

Brittney Riley

Written by

Co-Founder @femalefounderschool, Prev @villagecapital.

Village Capital

Blog for Village Capital. We're reinventing the system to back the entrepreneurs of the future - a future where business creates equity and long-term prosperity.