If you’re a founder looking for funding to grow your tech business, you’ll likely have wondered about what investors look for in management teams before investing.
With this in mind, we spoke to some of the most prominent investors in the UK.
This is what they’ve had to say:
“We love teams who are really strong on the ‘why’ of their business. Founders with a powerful mission tend to do better in riding the emotional roller coaster of ‘doing a startup’, and tend to be more flexible in their tactics.
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Founders who focus on the ‘what’ and the ‘how’ tend to find their thinking challenged, and often struggle to adapt to what the market is telling them.”
Blenheim Chalcot seeks to build technology companies from the ground up, tending not to evaluate existing founding teams, but rather assemble them.
Dan Cobley, the managing partner and former MD of Google UK, told UKTN: “It is our job to find a market-opportunity, and then assemble the right team to go after it.
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“When we’re building teams, we look for deep domain experience. We want people who know how the ‘pain’ of the problem they are solving is felt in the real world.
“We also want to see the ability to ‘sell’ – not just the art of selling product to customers, but we want senior team members who can sell a ‘vision’ to partners and new recruits,” he added.
Pip Wilson, a regular UKTN columnist and Angel investor also weighed in on the topic, noting that assessing a startup’s team is the most important factor for her before offering to fund a venture.
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“I only back diverse teams with at least one female founder and focus on teams where the different skills are clear.
“When I meet founders I want to see that they have passion for the company but also a good relationship with each other, are they clear as to the split of roles and do they work well together in a meeting situation.”
Ultimately, Wilson said she’s looking for founders and teams who mutually respect each other.
Sandy Mckinnon, a partner at Pentech Ventures, an investor in Nutmeg and FanDuel, said he’s on the lookout for founding managements that not only cover all the basses, but also exhibit exceptional leadership qualities.
Pentech wants teams which are clear in their mission and vision, can attract and retain the very best talent and are on the ball operationally. Resilience, Mckinnon added, is also high on the firm’s priority list.
Looking for this calibre, however, does come with its own set of challenges.
“Such teams are few and far between, and often we are thinking about how we can help ‘fill gaps’, but when they do come together, we recognise it and see it as the single biggest determinant for success in any company we might consider for investment,” the partner said.
Michael Tefula, associate at Downing Ventures, explained what the firm looks for in prospective investments.
“Entrepreneurship is a dynamic and evolving field so we look for founders who also have these two qualities. This manifests in a trait that all successful founders have: coachability.
“A coachable founder has a similar drive for growth and development that professional athletes do. They are data-driven, open to constructive feedback, relentlessly pursue excellence, and know when to adjust their approach in light of new information.
“At the early-stage of a business, founders might not have all the attributes of a successful entrepreneur. But as long as they are coachable, they can turn into great founders and it’s this potential that we look for.”
The human element
Ted Persson, operating partner at EQT Ventures, explained what he looks for in a founding team.
“When it comes to potentially funding a company, it’s important that the management team is heavily invested in how their technology relates to humans.
“Certainly, there’s a lot of interesting new innovations, from cryptocurrency and AI to VR, but the importance of the human element in relation to such technologies cannot be overstated.
“Often, this is tied up with design, as seen with the likes of Apple, which has paved the way for UX simplicity while also elevating the role of design across the tech industry as a whole through the appointment of Jony Ive as chief design officer. As such, companies which have someone in their C-suite focusing on how to make life better for humans is always a winner,” he noted.
Faisal Butt, of Spire Ventures, shared a personal anecdote to drive home what he’s after.
“In December 2013, I took a leap of faith in the then little known CEO Russell Quirk of online estate agents, eMoov. There was something about Russell. He was a brilliant communicator, but there was more than that. I sensed a doggedness in him that showed itself in flashes in those early conversations. And this was the personality trait that got him from one cliff-edge moment to another and was the foundation stone for navigating the business through the treacherous terrain of startup-dom.
“The key lesson for me was this: Russell was far from the finished article when we met him, but he had a high degree of aptitude. Over time, he learned about everything from startup finance to fundraising, board politics, hiring and managing talent, networking, and PR – the key skills you expect from a CEO. Although I don’t claim to have had 100% foresight at the time, I’d like to think we backed Russell not for the person he was, but for the person he was going to become.”
Dominic Wilson, managing partner at PropTech VC Pi Labs, agreed that personality played a huge part in the decision making process.
“What many people forget is that this is a people business – we’re investing in the team behind the product as much as the product itself, arguably more.
“Most entrepreneurs are eccentric, and it’s easy to see why; only very particular individuals have the ability and conviction to take the risk and develop an offering that even gets to the pitching stage. This isn’t an invitation for bad manners however, and tech teams in particular need to be aware of how they comport themselves with everyone from VCs to office staff. An investment is the start of a partnership and both sides must be comfortable with the other in terms of that relationship.
“Beyond the basics I look for teams who come to me with a realistic timeline and a game-changing product. Whilst it may seem that closing a funding round in less than a month or so demonstrates momentum, it is more often than not an indication of a lack of planning or that we aren’t really a priority for the entrepreneur. Once these boxes are checked and I’m shown a truly scalable product by a stellar team that provides a significant improvement to a diverse set of people – and isn’t simply a glorified marketing solution – then I get really excited,” Wilson said.
Julia Qiu, associate parter at Mosaic Ventures, said she loved teams who inspire her from the first meetings, either with vision, grit, passion or a combination thereof.
“A startup’s journey is never easy, so in having the privilege to potentially be a part of this, I look for people whom I can learn together with and who are in it for the right reasons, through all the ups and downs.”
Unique customer experiences
James Nettleton, a principal at InMotion Ventures, explained that the companies he invests in are helping to transport thousands of passengers a day between and across cities.
“This comes with a huge responsibility, so it’s crucial that the teams in our portfolio companies respect that these cities essentially act as stakeholders in their companies. As a result, we specifically look for founders who can prove that they understand the nuances of building productive relationships with city officials, who essentially act as both business partners and regulators.
“Secondly, we look for founders who understand what it means to offer a truly unique experience to customers. Companies in our sector too often engage in a race to give consumers the cheapest price, but the most effective transport and mobility services aren’t all about cheap prices and utility. Rather, we want to back founders who understand the importance of experience and great product design, and founders who care about creating differentiation from what’s currently in the market.”
Growing with the business
Ed Lascelles, a partner at Albion Capital, said his firm’s approach was to back teams who they believe would grow alongside their business.
“No company is the same at exit to the one we invested in, and nor is the founding team. Everyone learns and evolves along the journey (including the investors!). This means we are looking for teams that have a clear ability to listen and learn as well as to lead.”
Outliers and non-conformists
Diana Krantz, an investor at Draper Esprit, said her firm looks for typical qualities such as grit, passion and expertise, but also values someone who knows when to listen to the board and when to ignore it and focus on the business.
“We look for outliers and non-conformists. We often see this ability in people who previously attempted to build a business but didn’t get the result or exit they expected, or someone who was an underdog in a previous life, and had to build up a rare level of resilience and courage.
“At the same time, we look for people who have an optimistic and creative approach to life where working with them for the coming five or ten years will be enjoyable. Fundamentally, we look for people where we would buy equity in them if we could, because we believe they will succeed no matter what, even if it’s not with their current business.”
Similarly to most of his counterparts, Tim Mills, investment director of the Angel CoFund (ACF), noted how most investors will be looking for evidence of expertise or experience.
” If you can demonstrate previous successful entrepreneurial pursuits, that will be very attractive to investors. After all, they are not just looking for smart ideas, but need teams who can credibly unlock and scale the value in those ideas.
“In first time entrepreneurs, they’re looking expertise in the field the company will operate as well evidence of personal drive. While an individual may not have a history of successful ventures to lean on, if they have all the relevant expertise and unique insights it goes a long way. For example, I can tell you that if you’re being presented a MedTech device by a neuroscientist, it makes you sit up and listen.
“Investors are also looking for a team they can realistically work with. Often this means sincerity – founders who aren’t blagging. Investors are looking for integrity in the people they are backing and need to be able to trust the founders they are putting money behind.”
Charisma and emotional intelligence
Mina Samaan, associate at MMC Ventures, spoke about the power of charisma.
“If an entrepreneur has the propensity to attract capital and build relationships with high quality investors, they are also likely to be able to build relationships with current and potential new team members. This’ll also help them attract top senior talent, including a high-quality board.
“Demonstrating a high emotional intelligence to an investor is also hugely important. Entrepreneurs and management teams need to be resilient, courageous and have determination in executing their ideas for their business to be successful – but a high EQ will allow them to have the flexibility to let that vision adapt over time, if necessary. Investors are far more likely to back a company if members of the management team can demonstrate that they’re coachable, receptive to new information and open to ideas and market movements that may take their business in a slightly different direction.
“An inevitable part of any young company’s growth journey is making executive decisions that will be hugely impactful on the future of the business. However, the best leaders – instead of demanding the last word in decision-making – will empower and trust the right person on the team to make the decision on behalf of the company. This kind of attitude is incredibly attractive to an investor, as it’ll allow the business to scale much more efficiently.”
Ed Stacy, partner at IQ Capital, a firm focused on investing in deep tech, said:
“We’re looking to invest in management teams developing technologies that have a hard-to-copy component that gives a unique competitive advantage, that have the potential to be global successes in the markets they address.
“We look for balance in the management team as a whole, rather than just the attributes of individuals – and we like to see a passionate focus on developing leading-edge products combined with an agile and practical approach to overcoming market barriers,” he added.
People, people, people
Tom Britton, co-founder of Syndicate Room, also weighed in.
Carles Ferrer, general partner at Nauta Capital, said he looked for founders who believe in capital efficiency as passionately as his team does.