We’ve all heard the mantra before: when it comes to whether to invest or not, for investors, it’s all about the team behind a startup. But how do investors measure “the team”? For some, it’s a gut feeling. But for Khaled Ismail, managing partner at Algebra Ventures, it’s a science. Here are the four characteristics he looks for in any startup founder.
“There are certain things I test every founder for before investing. And the first thing I look for is family support,” Ismail says.
All too often, entrepreneurs give up later down the line when things get tough, because they lack the support systems in place to keep them going, he says.
On meeting a new potential investee, Ismail says he insists on meeting a close family member – a spouse, or parent – early in on in the relationship, to establish whether or not the entrepreneur has a strong enough support network behind them to be able to persevere.
“As a serial entrepreneur I know family support is very important.”
Next, Ismail says he wants to see real commitment from founders to building a great business – they need to be personally invested in the company’s success.
As such, the entrepreneurs behind a startup need to have skin in the game.
“Anyone who wants a market salary is out.”
It may sound obvious, but Ismail looks for a genuine passion in entrepreneurs about their startup. He likes to take some time in establishing how deep a founder’s interest runs.
Before deciding to invest, he observes an entrepreneur for a while. In outside meetings, does she talk about and pitch her work? Or does he “clock off” as soon as he steps out of the office door?
Finally, founders need to be able to listen – but that doesn’t necessarily mean blindly accepting advice.
“I test [entrepreneurs]through several talks and meetings on how much they listen […] But I also don’t like entrepreneurs who just listen and follow. Then I might as well do the company myself,” Ismail says.
On the other hand, a founder too stubborn about his own ideas will also be turned away. If an entrepreneur rejects every single idea, Ismail says it’s “not a good sign”.
All 4 = Step 1
“A founder needs to have all of these characteristics, not just some. And if they do, that for me is the start of an investment,” Ismail says.
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