How to be a Founder Worth Investing in

8 personal traits investors are looking for

If you’re an early-stage founder, the primary thing an investor is evaluating when they decide whether or not to make an investment is you.

Here’s what an investor is asking themselves:

Is this a person with integrity who has a relatively high probability to create a billion-dollar company in the general market/product space in which they’re operating?

This article examines 8 traits investors want to see in founders, why those traits are valuable, and how you can demonstrate your capacity in each of these areas. You don’t have to be the best at all of these, but you do have to know your strengths and weaknesses (see self-awareness) and you do have to demonstrate growth in each category.

1. Evidence of Excellence

If you’ve been excellent at anything in the past, it’s a good sign. The more the thing you’re excellent at is shaped like “building a company”, the better. The value of excellence in various fields to an investor looks roughly like this:

Building this company well > Building another organization well > Building parts of another organization well (e.g. owned a business unit, led an engineering team) > Doing some relevant business task well (building a product, sales, recruiting, etc.) > Doing anything well

Almost anything that you’ve done competently that’s hard to do is something that an investor wants to know about you, so it makes sense to sneak some highlights into your conversations with investors.

Did you run a marathon? Teach yourself to code? Work full-time while being the primary caretaker for your kids? Serve in the military? If you’ve worked your way into the top 0.2% of any skill — even if it seems irrelevant — there’s a solid chance an investor will want to know that about you.

2. Vision and Sense of Direction

There’s a great quote from Dwight Eisenhower: “Plans are worthless, but planning is everything.”

Eisenhower was talking about military strategy, but the same logic holds for early-stage companies. Your plan for where the company is going over the next decade doesn’t need to be right. It almost never will be. An investor isn’t going to write down your predictions, set a reminder for 6–18 months from now, and then make an investment decision on the basis of whether your plans were correct.

They want to hear your plans because they can give insight into

1. How you form and test hypotheses
2. Your understanding of a market/product space
3. Your process for getting from Point A to Point B
4. Whether you can be realistic and thoughtful about obstacles while still believing in your ability to overcome them
5. How you react to feedback
6. How well you can incorporate new information into your model of the world

Investors care about these things because being a good founder is about being able to run experiments well. You don’t need to have the answers now, but you need to be good at getting them. So it’s important that you can plan your experiments well, that you know which experiments are worth doing and in what order, and that you’re honest with yourself about the results. These experiments can take many shapes — who is my target customer? Should I hire a salesperson? What features does my product need? Is my time best spent on x or y or z?

You should aim to demonstrate that you know that startups are experimentation machines and that you know how to run experiments. Bonus points here for getting the investor’s imagination going by painting a compelling picture of a believable vision of the future that they hadn’t thought of before.

3. Ambition

What an investor wants to see here is probably best described as “the motivation to do big, challenging things, and the specific desire to direct that motivation towards building a company that could be worth billions of dollars”.

Ambitions can come from many places, and it’s useful for an investor to know where yours comes from. Some people’s drive comes from competitiveness. Some are obsessed with a product space.

When we look at the founders in our portfolio, we see a whole range of motivations. Praveen started NameCoach, a tool that helps people pronounce names properly, after he saw his younger sister’s name get mangled at her graduation. Whatever the source of your ambition, an investor needs to know that it’s strong enough to carry you through the inevitable struggles of building a company.

4. Resourcefulness

At an early-stage company, every tough problem eventually becomes the founder’s problem. Investors know this, and they know that new problems of new types will continue to emerge at every point in the company’s life.

Unlike some other leaders, early-stage founders don’t inherit resources and know-how. They have to create organizational direction and capacity on their own. Being resourceful as a founder boils down to two things:

1. Can you figure out what you need?
2. Can you get it?

Can you turn an idea into a shipped product? Can you distribute a product? Can you generate a repeatable process to deliver products and distribution?

The greater the proof that you can accomplish something like this — especially in a resource-strapped environment — the better off you’ll be.

5. Storytelling Skills

Have you ever had that feeling where you get tired of telling the same story over and over again? Like if you’re at a conference and every time you meet someone and they ask what you do, your brain just goes into automatic mode and you give the same dull answer you’ve already given 10 times today?

If you’re a founder, you don’t ever get to stop talking about your company. So it really helps if you like the story you’re telling, because you’re going to tell it to nearly every investor, partner, employee, and customer you talk to for a long time.

When you meet with an investor, remember that they want to hear a story they’ve never heard before. A story about you, your vision for the world, the team you’re building to make that vision a reality, your product and product roadmap, and the way the market and society will transform because of what you’re building. They want a story that holds up under intense scrutiny and paints a picture of a world where your company becomes massive and they become richer.

Your story will get better over time. You’ll get better at telling it. You’ll get better at connecting with the audience and understanding what parts of the story you should emphasize for them. As your company makes moves in the world, you’ll add past tense and present tense to your story.

6. Team-building Skills

There are few signals more powerful for an investor than a founder who’s built an impressive team. It shows:

1. That something about you or your vision is so compelling that impressive people are passing up other opportunities to bet on you instead
2. That you’re resourceful and ambitious enough to connect with and bring in all these impressive people
3. That when problems and opportunities arrive in the future, you have an impressive team to help you address them
4. That there’s a good shot you’ll be able to continue attracting impressive talent

Your team includes co-founders and early employees, who will likely be the biggest difference-makers, but it also includes investors, advisors, and other stakeholders who are with you on your mission. Even customers can be part of your team.

7. Feedback Skills

Feedback is the primary mechanism by which positive change is created in an organization. It’s the way you as a founder can steer your team in the right direction, and it’s also the way your team can steer you in the right direction. Good feedback skills are important for your growth as a founder and as an element of your company’s culture.

This sounds like an easy problem, but it isn’t. Think of all the reasons why a person might be reluctant to give transparent feedback to their supervisor, their colleague, or their direct report.

Often the people who have zero reluctance to give transparent feedback don’t think much about how to make their feedback digestible and useful to the recipient.

Imagine your company is a big ship. You’re standing at the helm trying to keep on course and operational, but you don’t have access to all the information. Some sailors are below deck trying to make sense of the maps, one crew just noticed there’s a problem in the food supply, someone found a leak in the ship, someone says they spotted land off to the west, another crew’s trying to fix the sail.

There’s important information coming from all over the place. But where is it going?

An effective feedback process lets individual units improve their own work processes, allows units to coordinate with each other, and allows you, the captain at the helm, to receive the timely information you need to set the right course and allocate resources toward getting there.

The same is true in your company. An organization with frequent, transparent, purposeful feedback cycles throughout is an organization that understands its own capacity and can effectively direct that capacity towards a shared goal.

8. Self-awareness

The company you run and the demands of being an effective founder are constantly evolving. A self-aware founder understands their strengths and weaknesses and, importantly, how those fit into the growth of the company.

Some weaknesses can be addressed through hiring and team-building. It’s totally fine if the founder’s not a great designer or accountant or programmer, as long as the founder knows that they’re not great at these things and hires/empowers other people who are great at them.

Some skills are uniquely high-leverage when housed in a founder. If you’re a world-class storyteller and a world-class team-builder, and you’re spending all your time A/B testing your homepage, you’re probably making a mistake. You should be spending your time recruiting, hiring, building partnerships, and evangelizing.

A founder and an employee with equal skills will accomplish the same thing when A/B testing a homepage, but a founder can accomplish far more than an equally skilled employee in recruiting, fundraising, and building partnerships because stories about the company told by the founder tend to matter more to potential hires, investors, and partners.