Every new founder requires money to fund the firm’s operation and generate profits; operating cash is essential when proving that your business concept is viable, and the capital is what keeps the business moving. Although VCs routinely hear incredible business ideas, creating a great company requires more than just having a concept and securing funding.
Every VC firm is interested in the core traits of a founder, such as their business plan, team, clarity of thought, strong communication skills, and attitude toward risk. These characteristics determine a founder’s success and, ultimately, attract investors to the company.
When founders are asked what features they believe venture capitalists seek, they frequently mention a long list of rather traditional traits: a demonstrated history of effectively raising capital from renowned venture capitalists, a history of leading businesses successfully, a strong network, etc. These are all desirable traits, but founders should consider having more qualities to attract investors.
Consequently, if you wish to build with Kinfolk, below is a list of some key elements we consider before making an investment decision.
Qualities VC's Seeks in Founders
Be passionate about Your Business Model
The secret to success is in the ingredient of desire. Venture financiers look for unwavering founders with zeal for their company’s growth because it is one of the qualities a startup entrepreneur must possess. Knowing their business strategy and conveying it are two essential traits VCs look for in founders.
Ideas can only succeed when you have an everlasting dedication to thrive in the business. VCs will always embrace passionate founders with quality leadership abilities who focus on success over those with many competing ideas. A driven founder would consider his business model independently, engage with leading industry experts, and choose the optimal course of action for the business plan.
Think Sharply and Communicate Succinctly
The founders must be knowledgeable of their company’s strategy. They should be able to concisely and properly articulate their concepts to employees, clients, business partners, and investors during the pitching process. It takes more than just outstanding ideas and a desire to make something work. You must be able to sell your thoughts as a founder through excellent communication skills.
When we interacted with some founders, one of the things we observed was their inability to describe their business models clearly. We are confident that intellectual integrity and clarity of thought are better predictors of success than IQ tests. Consequently, having the capacity to absorb complex ideas and difficult topics while remaining humble and courteous is essential. And so, we consider it necessary for founders to have intellectual integrity.
Verbal communication is not the only quality that defines a founder’s personality; body language is also crucial. And VCs will prioritize founders who can leave a lasting impression on them, which requires extra time and effort on your part as a founder.
Have Deep Industry Knowledge and Be Authentic
Industry expertise is crucial to leading the business to success. VCs will only favour founders with extensive industry knowledge and understanding, regardless of the domain. Extensive knowledge can only help comprehend other complications and market changes. Chaos will result if you lack industry-specific expertise in today’s cutthroat business environment. You can increase your knowledge without taking a course; all it takes is active study, constant fact-checking, and speaking with industry professionals.
Experienced founders won’t try to hide their vulnerabilities, will be self-aware, accept failure and learn from it, and won’t try to hide their errors. These are the founders that VCs are interested in working with.
Balance Risk with Responsibility
Not every startup can succeed and grow into a top-tier company like Amazon, Microsoft, or Facebook without facing failure and taking risks. A firm’s growth rate will depend on its founders’ tolerance for risk, and venture capitalists are always interested in wise founders who are willing to take calculated risks and lead their businesses to success. According to NFX, founders who want to build iconic companies are encouraged to take more risks and understand how to classify and assess the chances they will encounter.
Planning will be more straightforward when you can take risks as a startup. Doing this can change your approach or devise backup plans to deal with problems because you cannot meet these challenges unless you know the possible risks. VCs examine a founder’s risk profile and tolerance for risk.
When a founder possesses a very low tolerance for risk, it can be a warning sign because VCs prefer to work with founders who can take risks and accept responsibility for the outcome. A founder must be a brilliant and wise decision-maker because there is always risk involved with any new concept. And finding a means to make decisions and striking a balance between maturity and a responsible pioneering attitude is critical.
Team Composition
VCs are interested in the set-up of a founder’s team. They want to know what crucial competencies will be required for the business to succeed and how the team members will reflect these competencies. Every founding team needs talent, so founders should keep this in mind when building their board because great expertise is essential to achieving exceptional results. These three roles—the visionary, who is usually but not always the CEO; the hustler, who sets the pace and ensures everyone keeps up; and the hacker, who is the brains of the operation and makes sure the necessary hardware and software are current—are essential for the success of the ideal founding team.
A company grows through the skills and effectiveness of its founder. Their drive, tenacity, willingness to take risks, etc., will pave the way for success. Entrepreneurs should be able to express their ideas and confront challenges.
Venture capitalists are explicitly seeking that. They require a founder who can uphold their high standards of excellence. These characteristics of a startup founder can vary depending on the circumstances, but they will always serve as benchmarks for measuring a company’s effectiveness.
If you are the kind of founder we seek, kindly reach out, and let’s work on collaborating with you.