FREE online courses on Venture Capital Funding - What do Venture Capitalists look for - Entrepreneurial traits

 

There are five major characteristics that investors look for in entrepreneurs. The traits, in order of importance, are given below:

 

Leadership

 

It's often assumed that entrepreneurs are born leaders, but that's not necessarily true. Sometimes it takes years to acquire the quality. And sometimes it never surfaces.

 

Vision

 

Vision doesn't come magically; it comes from hard work. Thomas Edison said, “Opportunity is missed by most people because it is dressed in overalls and looks like work.”

 

Integrity

 

Unlike leadership and vision, this quality is nearly impossible to assess on first impression. But after six months of working closely with an entrepreneur, integrity, or the lack of it, becomes apparent. Judging an entrepreneur's integrity is crucial. The entrepreneur must tread a fine line between being honest and creating so

many problems that everyone's enthusiasm is dampened.

 

The Venture Capitalist must have a keen sense of where this fine line is drawn to anticipate problems and not overreact to the entrepreneur's concerns.

 

Caption: The goal is to build a constructive team with a relationship built on mutual trust.

 

Openness

 

Openness is the surest path to building a true partnership. Most great entrepreneurs are continuously taking inputs from everyone around them. They are constantly re-evaluating their own positions, questioning their own assumptions and becoming their own management consultants.

 

It's essential not to confuse openness with flexibility. Sometimes, flexibility is insecurity in disguise. Just as relying on a plan that depends solely on a Venture Capitalist's vision is a major error, so too is investing in a management team that depends too much on the advice of its own board or its Venture Capitalists.

 

Caption: Openness is watched very closely during the decision-making process.

 

Dedication

 

Much has been written about the classic traits of entrepreneurs: stubbornness, dedication, and pursuit of a goal despite adversity. The key is to combine the traits Venture Capitalists look for within the management team, and if they are not there at the time of the initial investment, add them as the business moves forward.

 

Caption: The importance of perseverance and patience in entrepreneurial efforts cannot be underestimated.