What is the single most important thing you care for when you are investing? Leadership and team.
I participated on the jury panel of EIT Food and Foodback.co’s recent Food Innovation Prize Day. As jury members, who were all investors in addition their other work, were asked this question above. And we unanimously had the same answer. Coincidence? I don’t think so.
For any business to succeed, a great idea is simply not enough. Ideas are abundant. The success of an idea requires a great team and leader. If the idea is the seed, the team is the soil that nurtures and grows it into a successful business.
The early days of every startup are rosy, optimistic, and full of hopes. The energy and enthusiasm are plenty. However, there are likely stormy days ahead. And the leadership must be prepared and strong to weather those storms and maintain that first day energy, inspire the team to give them strength and tackle the problems at bay.
What are those qualities that investors look for in the eyes, language and story of the founders as good leaders? If I were to name my top five it would be enthusiasm, trust, resilience, focus and flexibility.
Enthusiasm is driving energy that the leader will need to fuel her/himself. The leader must be able to maintain a realistic but positive attitude to be able to motivate the team during both good and bad times.
Trust is multidimensional. The leader must be trustworthy to lead the team, customers and investors. Trust does not mean not lying. It also means being reliable from minute promises to maintaining a consistent composure.
Resilience is key to maintain that composure and strength during difficult times. And to being able to stay focused, which is key to remain on target, to use the limited resources efficiently and in a way that contributes to achievement of the ultimate goal. Unnecessary shifting (and sifting may indeed be necessary sometimes) of goal posts or targets wastes resources, tires out the team, and investors.
Flexibility is also multi-dimensional. At times, the leader has to be flexible to refocus or refine certain objectives based on changing circumstances. Balance is critical here. A leader should also be openminded, open to criticism and contributions. The notion that the business idea owner knows it best and knows all is a business killer. It deprives the leader of the ability to learn from others and benefit from what the investors can contribute with their experience and network.
Here are a few additional useful readings on leadership for entrepreneurs and in startups:
Why Cultivating the Right Leaders Helps Startups Succeed (Knowledge@Wharton)
Why is Leadership Important for Startups? (Growth Rocks)
How Much Does Leadership Actually Matter in a Startup? (Entrepreneur)