I have 9 years of experience as a venture investor, and I can confirm that one of the most important things in a startup’s early stages is the team. Therefore, whether or not I decide to invest in a project largely depends on my meeting with its founder. In addition to convincing me with figures, he/she needs to build trust. While I might feel ready to invest after the first meeting, I often take some weeks to reflect.
These are the qualities that influenced my decision.
Industry Knowledge and Experience
As a founder, you must know the ins and outs of any industry you want to venture into. For example, a fintech entrepreneur with prior experience in the banking sector will offer invaluable expertise. This is a quality I appraise, as it means you have a firsthand understanding of the industry's pain points and nuances.
As an investor, I also consider the educational background of the founder. I inquire about their academic achievements, including grades and thesis topics. A solid educational foundation adds credibility to the founder's qualifications.
Entrepreneurial Background
Entrepreneurship is a rare talent; from my experience, only about 2% of individuals inherently possess it. In most cases, experience is the best teacher. Therefore, I value founders who have gained experience in large corporations before embarking on their own ventures.
Additionally, I have greater confidence in founders who have undergone 1-2 unsuccessful projects. In my view, success alone doesn't provide valuable lessons; it's the mistakes and setbacks that offer profound learning opportunities. It's crucial that a founder evaluates these experiences and learns from them.
Willingness to Admit Mistakes and Accept Change
Periodically, I meet founders who don’t take criticism well. They find it difficult to admit mistakes and often accept a single hypothesis as the truth. But to make an idea work, you need to test 5-10 hypotheses, adapt the model, and possibly make a pivot. Instead, they're stuck on one idea and keep forcing it; even if it's not improving.
Beyond the product itself, there are external factors necessary for growth. Hiring the right team, building a marketing strategy, finding enablers, and so on. Experienced investors with foresight can discover potential pitfalls and highlight blind spots, but not every founder is an open listener.
As much as I value entrepreneurial experience and industry expertise, founders need to remain flexible so that their experience helps, and not hinders, the startup's growth.
Honesty
I value honesty right from early communication with the founder. My confidence in a project grows when founders openly discuss challenges, setbacks, and whatever isn’t working.
Sometimes, initial hypotheses don't pan out, but determined founders continue to explore and iterate. Other times, customer acquisition costs may be prohibitively high, prompting them to experiment with new acquisition or investment channels.
Being candid about what's not working demonstrates integrity, resilience, and a commitment to finding solutions. On the other hand, if founders withhold information about their challenges, it diminishes my confidence in the project. As long as I believe in the vision, I’m always open to offering solutions where possible.
Passion
Building a startup often spans a decade-long journey. Passion is needed to drive the commitment to see this long path through. Therefore, I look at how passionate a founder is about his/her project, and how deeply immersed they are in the topic.
I also prioritize understanding a founder's commitment level and endgame aspirations — whether they are ready to dedicate themselves fully to the project, aiming for a profitable exit, or seeking to establish a lasting legacy for future generations.
For instance, one founder candidly expressed a desire to exit the startup within 3-5 years. In response, I adjusted my expectations accordingly and focused on realistic growth targets rather than aiming for astronomical returns.
Conclusion
Successful tech entrepreneurs have a fine blend of unique skills, industry expertise, and unwavering passion. In my view, to achieve success, a founder must be 120% committed to their startup, whether it’s for the short or long term. They must also be adaptable and not overlook potential challenges.
A final word to the upcoming innovators and industry disruptors:
When engaging with investors, demonstrate your expertise and unwavering motivation. To build trust, be transparent in your dealings and forthright about the obstacles you face. Substantiate your claims with solid data to crown your efforts. Adopting this approach will significantly enhance your prospects of securing funding.