What are VCs Looking for in Founders in 2024?

When investing in a seed-stage company, investors understand that the journey may involve changes to the business, the product, and possibly even the market. This is why early-stage investors often emphasize “betting on founders” — the people driving the business.

Identifying successful founders is akin to picking winning stocks; it’s challenging, but some investors have a knack for it. Eight Six Ventures asked a crucial question: What qualities make a winning founder?

Below, our team has highlighted five key qualities we believe a successful founder embodies:

1. Curiosity & Decisiveness

Founders must aim to do things differently, not just better. A mindset of curiosity helps entrepreneurs spot opportunities for change and disruption. They drive product development and customer research by gathering information through reading, listening, and engaging with others. 

However, founders must ultimately make their own decisions. The strength of decisiveness enables entrepreneurs to take control of their destiny and make swift, informed decisions that lead to success. Effective decision-making is crucial for innovation and growth, as it enables entrepreneurs to seize opportunities when they arise.

2. Passion & Obsession

Passion is often seen as fundamental to entrepreneurship. It fuels the relentless pursuit of an entrepreneurial vision and can inspire others to support it. Passion is essential for maintaining motivation, especially during periods of uncertainty or adversity. It leads to deeper engagement with work and a willingness to invest the necessary time and effort to grow a venture. 

However, obsession might be an even more defining trait of successful entrepreneurs. Obsession manifests as an unwavering focus on innovation and improvement, maintaining a commitment that denies the possibility of failure. Nonetheless, entrepreneurs must balance this drive with strategies to maintain their mental health and avoid burnout.

3. Deep Expertise

Venture capitalists highly value prior industry experience in the founders they choose to back. Whether they are insiders or outsiders, veterans or first-time founders, successful entrepreneurs must have deep expertise in their field. 

Industry experience provides a deep understanding of market needs, customer pain points, and the competitive landscape, enabling founders to navigate complexities and opportunities effectively. This prior exposure reduces perceived risk from the VC’s perspective, suggesting the founder has a realistic grasp of what it takes to succeed, increasing confidence in the startup’s potential.

4. Effective Team Building

No single person embodies all the skills needed for a successful business. Investors consistently noted the importance of founders being aware of their strengths and weaknesses and hiring a team to fill the gaps. A diverse team brings a mix of talents and expertise, ensuring all operational domains—technical, strategic, financial, or marketing—are competently managed. 

Effective leadership and people management skills are essential. Founders need to inspire, lead by example, and manage a team toward achieving shared goals. A positive and supportive team with the right balance of process and structure is crucial for success, with all members understanding their roles and aligning on the same agenda.

5. Growth Mindset

Being a founder requires strong determination, courage, and a growth mindset. The concept of a growth mindset, introduced by psychologist Dr. Carol Dweck, posits that our mindset plays a significant role in our success in any endeavor. 

People with growth mindsets view abilities, talents, and intelligence as qualities that can be developed through hard work. They see challenges as opportunities for growth and discovery, while those with a fixed mindset see them as insurmountable obstacles and stay within their comfort zones. 

Founders must constantly improve and iterate themselves and their products to avoid being passed over.