Top traits VCs look for in a startup founder
Most investment decisions are taken based on the capabilities of the startup founder, rather than the startup itself. Let us look at the top traits VCs look for in an entrepreneur.
The startup ecosystem benefits greatly from venture capital funds. In addition to capital, VCs offer tailored support, exposure, as well as mentorship. In India, the VC community has expanded beyond its infancy stage, and now covers an extensive network of wealthy individuals.
However, convincing a panel of seasoned venture capitalists to invest in your startup may be more challenging than it seems. With hundreds of other startups eyeing the same opportunity, you need to grab and hold their attention. After all, most of the investment decisions are taken based on the capabilities of the startup founder, rather than the startup itself. Let us, then, look at the top traits VCs look for in an entrepreneur.
“People with passion can change the world.” This simple phrase comes from Steve Jobs, one of the greatest entrepreneurs of modern times. Passion is one quality that can’t be substituted. An entrepreneur can have a great idea, but it may never see the light of the day if he lacks the passion for what he is creating. More often than not, VCs prefer a driven individual over someone who fails to show any enthusiasm about his startup.
This is perhaps one of the most important yet underrated skills an entrepreneur requires.
Explaining the idea behind your business to investors, customers, and partners is an imperative part of running a startup. When you are pitching your idea to VCs, they not only look at your verbal communication, but also your body language.
Crossing your arms, for example, can indicate that you are feeling insecure. Effective communication, therefore, is the way to build a strong rapport with the investors.
An appetite for risk
Entrepreneurship is a risky business. It is common knowledge that for every Google and Facebook, there are thousands of startups that died a premature death. As an entrepreneur, your risk tolerance should be higher than your counterparts. Venture capital firms want to know how well you act in the face of risk. This is one quality that not everyone possesses, and the ability to take calculated risks is the key to success.
How hard are you willing to work to turn your dream into a reality? Perseverance is the key ingredient to success – the ‘X’ factor that separates the winners from the rest. Successful entrepreneurs continue to push towards their goal, even after they have been knocked down multiple times. But, perseverance shouldn’t be confused with stubbornness – pouring resources into a failed idea without any foresight is never the right approach to entrepreneurship.
Persistence is crucial, but so is adaptability. With the startup world evolving constantly, circumstances can change anytime. What is profitable today may run into losses tomorrow. Hence, VCs are more likely to support an entrepreneur who is open and ready to change. That’s because if you can’t adapt to new situations, your startup wouldn’t be able to tackle unforeseen challenges. But, how do venture capitalists evaluate an entrepreneur’s adaptability? Curveball questions are the most common way to find out whether someone is flexible in his approach.
Do you have in-depth knowledge about the industry your startup operates in? A VC fund will only back an entrepreneur if he has extensive, industry-specific knowledge. Experience is a plus, but having an educational background also helps. The good news is that you can acquire knowledge from articles, research papers, and even spending time with an industry veteran.
In today’s fiercely competitive environment, passionate entrepreneurs who pay attention to details, communicate effectively, and push through despite being faced with obstacles are the ones to succeed. While the scenario can be different, VCs only seek individuals with this winning combination of the above mentioned traits.
(Edited by Evelyn Ratnakumar)
(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of YourStory.)
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