Founders – are you investable?
How important are founders to start-up success? Many believe the key to growth is a brilliant idea; a fantastic product or game-changing service, but data has shown people to be even more important. According to a study by Idealab founder Bill Gross, ‘timing’ is the most essential growth lever for start-ups with the ‘team’ scooping silver and the ‘idea’ propping up the podium.
As a VC Talent Director specialising in tech start-ups, this is not surprising to me. Talent capabilities are inextricably linked to scaling and, pre-series A, understanding their potential, is critical to making good investment decisions. At AlbionVC, we create a leadership profile of the founder before making an investment. As I begin my adventure with AlbionVC, I want to share a core talent question: What are the founder characteristics which give us the greatest prediction of sustained growth?
Why is the founder’s profile so important, when linked to scaling?
In the early days, the founder is the company. From working preferences and core capabilities to personality traits and behavioural values, a pre Series-A company reflects its founder’s identity with its culture, hiring and direction.
Let’s look at culture, for instance. Are there shared values, goals and attitudes? Well, if the founder is driven, trusting and realistic, it’s likely that a culture of ambition and teamwork will feed into the sinews of the start-up too.
Now, take hiring. Founders often rely on their instincts and hire on gut feelings; their innate biases leading them to ‘people like them’. This can be beneficial initially: a team that instinctively works well with each other acts as a growth accelerator in the beginning. However, scaling a homogenous team amplifies both strengths and blind spots. Without adaptation, things can start to go wrong.
As a founder, you play a primary role across all aspects of your company and are therefore a primary focus for investors.
What are the key investable characteristics?
As an early-stage Talent Director, I predict talent performance in the future. Just as start-ups are not fully-formed companies, founders are not fully-formed leaders. Both need support to grow. I use evidence-based indicators to determine if a founder (and therefore the start-up) has the right characteristics to achieve rapid company growth and the founder’s potential for leadership development, ahead of the company growth curve.
I call these indices founder spikes and scaling risks. Founder spikes consider the traits of leaders who thrive in start-ups and which empirically lead to high performance during periods of rapid growth. Scaling risks gauge the probability that growth is not sustained. Taken together, they help determine the ‘odds’ for achieving shared value through shared growth.
Founders, I will therefore rank you on 6 C’s:
Commitment to results: are you ambitious, resourceful, focused and yet realistic?
Credibility: do you have deep expertise and knowledge of your market landscape, do you see both vision and detail and have the clock speed to continuously stay ahead?
Change agility: are you resilient, decisive and composed under pressure?
Contagious conviction: are you persuasive, visionary and driven to inspire belief?
Coachability: are you emotionally mature, self-aware and willing to both listen and adapt?
Collaboration: are you pragmatically inclusive, trusting and appreciative of others with the EQ to concurrently praise and demand more?
Identifying areas for support is equally as important. By assessing risks, we can also understand where to build complementarity, so that the team grows together and the company scales successfully.
If yes, come and speak to me
It may seem like an examiner telling you the perfect answer in advance, but we’re on the same side. The value I bring, as the Talent Director at AlbionVC, is to help unlock human potential within our start-ups. I’ve been working with entrepreneurial talent for 24 years and each founder I work with helps refine the methodology, so you’re not only benefiting from hundreds of other founders’ experiences, but also empowering future founders too.
Bill Gross says “start-ups are one of the greatest forms to make the world a better place” and I fully agree. So if you’re an early-stage software or healthtech founder, get in touch so we can help you fulfil your growth potential and transform tomorrow’s landscape.