Successful Startup Teams
A recent discussion regarding how we evaluate founders lead us back to a Harvard Business Review article from 2019 titled “What Makes a Successful Startup Team” by Eva de Mol. The article touches on the difference between experience and a strategic vision shared across the team. Stacking the founding team with a bench of great resumes can either help a company succeed or become a warning sign for investors.
What does that really mean to back dynamic teams? Dynamic in our view is an ability to work as a cohesive team and maintain market flexibility. If a market suddenly shifts, the team needs to have confidence in each other to find the best pivot opportunity. A few years ago, we invested in a B2C service company that had its business model severely impacted by COVID, but the team quickly tested several new sanitization and cleaning ideas and pivoted to new ways of generating revenue. The company managed to continue growing its revenue and now added another line of business. We have seen other companies freeze during challenges, especially when executives realize they may not completely understand how the market has shifted. One company we did not invest with recruited a CEO with an impressive resume, but when the market started to shift the CEO refused to admit they did not understand how to take the next step. So instead of asking for help, the CEO provided only good news reports to the board while trying desperately to do everything themselves in the background in hopes their inexperience would not be exposed.
Uncovering dynamic teams usually starts with the founder or CEO. Listening to an initial pitch meeting tells us a lot, even if just the founder is presenting. How many times to they reference the team or individuals as part of the strategy? Do they indicate how the team works together? Does the presentation include a lot of “me” or “I” comments, or is it more geared to “we” and “team”? Angel and venture investing is ultimately about finding the best stewards of investor capital, so part of what we do is evaluate team psychology and remind ourselves to not get impressed by the concept or technology until we understand the full picture.