Recipe Book - Strong Founders

What early-stage VCs look for in founders

At the earliest stages of investing, finding the right founder is critical to a company’s success. These attributes can be broken down into (1) characteristics, (2) skills, and (3) traits. Evaluating a founder’s characteristics, skills, and traits to determine if a founder(s) has the ability to lead the company to success can be a make or break any early-stage investment.

Let’s dive into some of the core tenants we at m]x[v look for when evaluating founders.

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DETERMINATION

Building a company is not for the faint of heart. The ability to push through the inevitable difficult times of business building to actualize a company’s vision is underrated. Founders need to be deeply passionate and relentless in their pursuit to make their company a reality. Determination and passion are what set successful entrepreneurs apart from those who start companies for the sake of starting one. Possessing innate drive is one of the key forces that keep founders pushing forward when the going gets tough and keeps their teams motivated and focused.

VISION

When founders pitch, we seek to understand what their vision is for their product. It’s crucial that they have a clear and compelling vision for the company, and have the ability to articulate it in a way that inspires and educates others. They need to paint a picture of what the company’s future will look like if successful, and communicate this vision to investors, employees, and customers. They need to rally people behind their vision and to create direction and purpose for the people supporting them.

It’s important that founders have a long-term plan for the company, and a clear vision of what they want to achieve and how. We also want to see that founders have the malleability to think beyond the immediate challenges and have a plan for how they will overcome them.

COMMUNICATION & LEADERSHIP

As my mother used to say, “the spoken is the understood.” Being able to organize your team around your vision as you build out the product roadmap is crucial to ensuring your team is running in the same direction. It also enhances team efficiencies and limits miscommunication. Being able to communicate to your investors whilst building the product empowers your investors to feel informed on your progress and allows them to lean in where needed. Communicating well with your customers allows you to level-set expectations on where the product is now and where it will be later down the line. It’s important that, as a leader, you set an example for your team and build an ecosystem of trust, clarity, honesty, and communication. Creating a healthy ecosystem allows you to scale, grow, and build a lot quicker. Good founders must be able to inspire and motivate others, and create a positive and productive work environment for their team. They must be able to make tough decisions, and they must be able to communicate their vision and strategy to others.

ABILITY TO SELL

One of the most heralded skills for an ideal founder is the ability to sell. At the earliest stages of building, the ability to (1) sell your idea to potential investors, (2) sell your product to early customers, and (3) sell your company to potential employees, can make or break your company. Ultimately, when you’re fundraising in the early days of your business, you’re asking everyone to take a bet on you and your vision. Being able to do this well can make or break your company.

WINNING MENTALITY

A successful business requires resilience, persistence, and the ability to overcome challenges. A winning mentality enables founders to stay focused on their goals, maintain a positive attitude in the face of setbacks, and continuously strive for improvement. Without it, founders run the risk of giving up too easily or becoming discouraged by obstacles, which leads to a greater risk of failure.

CONVICTION

Starting a business requires taking risks, facing uncertainties, and making difficult decisions. Conviction helps founders stay committed to their vision and values, even in the face of doubts, criticisms, or obstacles. It empowers them to make tough calls and to pursue opportunities that align with their goals and beliefs, even if they are not popular or easy. Additionally, conviction inspires confidence in employees, investors, and customers, which can be crucial for building trust and support for the business. Without conviction, founders may struggle to make the tough decisions and take the bold actions necessary for success, and their business may lack a clear sense of direction or purpose.

While the above attributes/skills are central to what we at m]x[v look for in founders, we also consider the below factors:

• Co-founders: Though many VCs have a different take on this point, our fund prefers to see teams with multiple founders. First, having a co-founder can bring complementary perspectives and skills to the business that can enhance the team’s ability to execute and innovate effectively. Second, co-founders can provide emotional support, accountability, and motivation to each other, especially during challenging times. Third, multiple founders can also distribute workloads and responsibilities amongst one another to avoid burnout. Finally, co-founders can bring different backgrounds and experiences that can contribute to a more well-rounded and diverse team.

• Radical Self-Awareness: We look for founders that are able to see their strengths and weaknesses, truthfully evaluate their contributions and needs, and weather the ups and downs without self-justification. This trait allows founders to act out of humility and assume they’re not always correct. It encourages them to ask for help, ask questions, and take feedback. By acknowledging where their weaknesses lie, founders are able to identify where additional support is needed.

• Domain Expertise:  We value founders that have a deep understanding of the business and the market they’re targeting. This becomes evident by their ability to identify opportunities and develop strategies to take advantage of them. Having strong financial acumen, the ability to create/manage a budget, understand the importance of cash flow, and have a good grasp of key financial metrics such as revenue, profit margins, and burn rate is also ideal.

• Adaptability: The ability to be creative and resourceful to find solutions to even the most difficult of challenges is important. Founders that can think on their feet and are adept at pivoting is critical given the challenges they will see while building their business.

• Experience: To start and grow a successful business, a founder needs to acquire a wide range of skills, knowledge, and insights. This toolkit allows them to make informed decisions, avoid common pitfalls, and adapt to changes in the market or industry. Experience is also additive in efforts to develop a strong network, build investor credibility, and attract talented employees. With experience, founders can have a better understanding of their customer’s needs and what is required to develop products/services that meet their expectations.

Most venture capitalists want to see that founders are able to lead the company through both good times and bad while bringing out the best in their team. They want to see that the founder has a clear understanding of what it takes to build a successful company, and that they have the skills and experience to lead the company to success.

At m]x[v, we assess this unique combination of traits and skills in our founding teams and believe that embodying these attributes increases their chance of securing funding and achieving long-term success for their company.

ABOUT m]x[v CAPITAL

m]x[v Capital is an early-stage debut venture fund focused on funding and founding the future of cloud. The fund is dedicated to supporting tenacious founders who are paving the way for the next generation of B2B enterprise SaaS. The leadership team is led by experienced entrepreneurs and operators who have a proven track record of building successful companies. We lean in heavily with our portfolio companies to ensure that we are providing true support and insights as our founders embark on the early days of building a business.

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