What to look at in a founder team from a VC perspective

We at BV4 work very closely with founders and often support them over a longer period of time. This has allowed us to gather a substantial amount of data around key character traits of great founders. We use this experience to assess founder teams for investors as part of our due diligences.

Clear view on the market

• Great founders see market developments as opportunities to innovate and capture market share.
• If founders have an idea of how the market will develop they not only have a clear vision on how to further build their startups. They also keep focus and use their market insights as a compass in their development.
• Having a clear idea of the future market is also a good sign that founders understand the ecosystem they are playing in. However, this doesn’t mean that founders must necessarily come from this particular industry. It’s more important that they challenge the status quo.

Ambition

• Not every company needs to become a unicorn but from a VC perspective, a startup should be able to have the potential to return a significant part of the fund.
• If founders want to be eligible for VC investment, their ambition should be clear and big.
• In most cases this needs to result in an objective to become leader in a market bigger than the home market in order to match the ambition.
• Consequently such a large ambition also requires the ability to develop fast. 90% of all startups that became unicorns were led by fast moving founders. This shows how crucial it is to develop fast and reinvent yourself over and over again.

Ability to gather great minds around you

• For a founder, it is key to find a great founder team that is willing to push the idea further.
• But it doesn’t stop there. A key challenge for any founder team is to hire the right people – at the right time.
• If a founder team can show that they can convince and attract a great set of skilled people early on, the chances of success in the scaling phase are higher.

Self-awareness and coachability

• Nobody is perfect and no founder is the perfect fit for all development stages of a company from pre-seed to unicorn.
• Therefore it is important to be aware of yourself and your strengths and weaknesses in order to gather the right support around you.
• Support systems are only as good as the founders who are willing to accept them. Consequently, great founder teams qualify themselves through being coachable and open for feedback.
• In this context, a certain level of humbleness about themselves is well seen by VCs. This doesn't mean however that the ambitions cannot be big.

Resilience

• Most founder stories include some near (company) death moments which turned out to be a crucial turning point.
• Thus, resilience and stamina are important in order to turn the company’s development into a success story.