Once our team identifies a big problem to solve with a partner through startup creation and design and launch a venture-backable business, we pair that company and funding with the ideal founding team best suited to scale it.
When we first started venture building with corporate, university, and public-sector partners, we mainly looked to our existing network to find great founders. Our team tapped the most talented builders we worked with at previous organizations: smart, dedicated, proven people we knew and trusted.
As our own operations and network scaled, though, we needed to get better at discovering strong-fit founders whose expertise and experience closely aligned with companies we were creating.
We’ve had the benefit of time for our portfolio to mature.
Since we launched in 2020, we’ve learned a lot about the specific attributes of entrepreneurs who thrived as they grew their organizations — traits that inform our founder recruiting efforts today.
The 6 common characteristics of highly successful early-stage startup founders
1) Foundational leadership skills (based on past work)
The first quality we index for is zero-to-one experience or experience evolving through exponential scale at previous companies. Ideally, successful founders have a history of scaling a venture-backed startup to a meaningful outcome.
The reality is that zero-to-one can be the hardest growth possible. It's creating something out of nothing.
Alternatively, experience as a leader in a successful scaleup, spin-out, or new product line can also be advantageous. It demonstrates the ability to execute and drive growth. That builds confidence that scaling experience can translate into zero-to-one building.
Financial acumen is also critical for a startup founder to ensure the sustainability and success of their company.
In the beginning, the founder is also the interim CFO. The founder must build and maintain sound financial models, enabling her to make informed decisions regarding cash burn, sales, and fundraising. A solid financial foundation enables a founder to effectively manage resources, assess growth opportunities, and attract investment.
Building, directing, and leading an effective and efficient team is another fundamental skill set in company-building.
Startups thrive when teams work collaboratively towards a shared vision, leveraging their individual strengths to achieve collective goals. Founders must excel at recruiting top talent, fostering a culture of trust and innovation, and providing guidance and support to help their team members reach their full potential.
2) Fundraising savvy and board management experience
Early-stage startup founders report to a small board from day one.
A great founder will proactively manage their board to ensure all stakeholders understand what is going on in the business while maintaining the board's confidence.
Founders need to remember their board is part of their team.
They need to manage up, and will ideally leverage their board appropriately to get the most out of those relationships — be it customer intros, industry access, strategic advice or the ad-hoc problem-solving phone call.
A strong founder should be able to foster conviction in the direction of their plans and be coachable and open to the perspectives of the board to refine or pivot their strategy.
Our companies require venture capital to scale. An ideal founder candidate has experience raising venture capital.
However, we may be able to get conviction in a founder candidate who has demonstrated experience in related fields such as sales or corporate development, given the parallels in fundraising.
It’s essential when fundraising that founders understand the motivations of venture capitalists and the metrics by which their company will be evaluated.
Founders should be able to tell a compelling story that instills confidence in potential investors, showcasing their startup as a worthwhile investment that solves a big problem in a significant market with the potential to capture value.
"We empower founders who take on roles at our PortCos with the tools and support to manage boards effectively, foster investor confidence, and navigate the complexities of scaling in competitive markets," said High Alpha Innovation Director of Talent Cate Mollett.
3) Background in building GTM and distribution strategies
Chief executives of pre-seed startups must learn how to sell their solution before they can hire someone else to do it. Their main focus should largely be building conviction with early customers, investors, and the market.
Their duties, at least to start, should resemble the day-to-day responsibilities of a salesperson.
"All of our portfolio companies start out with 'founder-led sales," said Cate. "That means it's critical that the founding CEO has the ability to drive early revenue without having to depend on an in-house sales team to start."
Early-stage startup founders are responsible for generating leads and working through the sales and contracting process in the early days. But they're also tasked with:
- Testing initial pricing and packaging strategies
- Developing ideal buyer and user personas
- Maturing sales strategies as the company grows and pivots
- Create a repeatable sales process and product-market fit
An archetypal candidate will know how to conduct market-sizing exercises, launch a new product, and own or contribute to a full sales process.
These criteria are a filter that results in separating out a high number of founder candidates.
4) Experience with scaling and evolving software product
For software startups, founders need to understand the concept of building a minimum viable product (MVP) and scaling a product effectively
Startup founders must strike a balance between tailoring the product to early adopters' needs while maintaining a sustainable product roadmap.
It is essential to resist the temptation to build custom software for early customers and instead focus on developing a product that appeals to a broad market.
All founders must know how software is built and scaled. (Though, in our typical founding-team formula, only one is responsible for leading the execution of actually building it.)
5) Subject-matter expertise that aligns closely with startup
Industry expertise can be a valuable attribute for founders, depending on the nature of the business and industry.
Founders bringing subject-matter expertise to the business are well-versed in the workings of their respective industry and possess knowledge from years of experience that can’t be learned quickly.
Founders with a background in the functional industry into which their product is sold also benefit from credibility in that industry. They know how to sell a product or service to customers.
Equally as important, they can speak their language to build rapport.
And their extensive experience credentializes the team and company in the market, and their relationships with influencers, customers, and competitors give the company a competitive edge.
However, this attribute has the widest variation in prioritization in our founder searches.
In highly regulated or nuanced industries (e.g., healthcare), industry experience is vital. For other startups, industry experience can actually act as a barrier to seeing things in a new way.
Regardless of their experience and expertise in the space, founders must be passionate about the problem their startup is setting out to solve.
"If a founder candidate lacks the SME required to take over one of our PortCos but is a strong candidate otherwise, we can work with our network to support CEOs with advisors, mentors, and board members who do have expertise tied to the company," said Cate.
6) Grit (get-it-done attitude) and ability to receive coaching
The most nuanced criterion we screen for in our founder recruiting process is a core set of personality traits. And grit is right at the top of the list.
Founding a company is hard. Often unglamorous, even. And it can remain that way for a long time. Research shows that grit — or resilience — is a more reliable predictor of early-stage startup founder success than any other metric.
On the flip side of grit is coachability.
One of the advantages that benefit our founders is access to a team of coaches and advisors who are experts in many facets of company building.
Our CEOs are not controlled or dictated to by the venture studio team. Those who are most successful are eager to learn and receptive to productive feedback.
Successful founders who take over our portfolio companies are curious, not defensive, when someone challenges their solution, and they have intrinsic confidence and thick skin to push through.
This guidance ultimately enables our founders to prioritize ruthlessly. Startups fail from distraction. That means our PortCo founding teams need to be comfortable with ambiguity.
Our early-stage founder learning continues
We continue to unlock insights from the dozens of portfolio companies we’ve launched. The criteria above is certainly ever-changing, based on new data generated. Every new launch demands a bespoke founding team composition.
But, from our findings to date, we're certain this is the core 'recipe' that best enables us to find top-tier founders — and quickly.
"Our search for top-tier founders emphasizes strong SME aligned with the startup's business model industry," said Cate. "This, coupled with grit and resilience, ensures our portfolio companies are led by people who are both deeply passionate about their solutions and capable of overcoming challenges with unwavering determination."
