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Secret guide to what investors look for in a founding team before investing

  • Posted By Team Growcent
  • On 18 November 2020
  • Tag: Fundraising, Startups

It is always a point of discussion that what investors look for in a founding team before investing.

So, in this blog, I have covered four essential factors. This can help budding entrepreneurs to identify with the needs of investors and follow the golden path to glory.

  • Domain expertise

    Domain expertise refers to your knowledge in a particular area or topic, specifically in the area in which you are founding your startup. At the time of evaluating a team’s domain expertise, investors look at how qualified a team is to be working on the problem they have chosen. Do they have experience in the industry? Do they have some unique insight that no one else has?

  • Academic or employment pedigree

    By looking at the companies or academic institutions a company is associated with, investors are able to make quick assessments of the quality and experience level of the team. That said, these criteria tend to lead to a lot of bias, as investors tend to value companies they have heard of over ones they have not or schools they are familiar with. As an entrepreneur, you should be conscious of investor biases. Research investors and try to position yourself in the best way possible for each investor.

  • Investors
  • Team dynamics

    Team dynamics refer to how well a team works and functions. Investors may look at how long team members have known each other and whether or not they have worked before as a way of determining whether they will work well together in the future.
    Investors will pay close attention to the relationship and interactions between team members in meetings.

    • Is there any type of obvious tension or misalignment between you and your co-founders?
    • Is everyone in agreement about roles?
    • Are you talking over each other?
    • Is there a team member that is missing from every meeting?

    Take an objective look at your team dynamics, solve any issues, and be cognizant of how your internal dynamics may be perceived by outsiders.

  • The diversity of skills on the team

    At the time of evaluating your team, look at what skills the founders have. Do they have the expertise needed to actually execute on their solution? If they don’t, what is their plan to get the needed expertise? Avoid showing your founding team as having similar skillsets. Be very clear about who will have what roles in the company, so that investors know there would be tension over who gets to be CTO or CEO, for example.
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