Dear SaaStr: Besides Fast Growth, What Are VCs Looking For in Founders?
In the end, most VCs are looking for huge market pull, and ultimately, massive growth first and foremost.
But founders are > 50% of the bet, too.
Investors evaluate startup founders based on a mix of personal traits, leadership potential, and their ability to execute. Here’s what they’re really looking for:
- Resilience and Grit:
Founders need to demonstrate they can weather the inevitable ups and downs of building a startup. Investors want to see that you won’t quit when things get tough—because they will get tough. This is especially critical in SaaS, where the journey to $100M+ ARR can take a decade or more. - Vision and Clarity:
Can the founder articulate a compelling vision for the company? Investors want to know if you can inspire not just them, but also employees, customers, and future investors. A clear, bold vision is often what separates great founders from good ones. - Domain Expertise:
Founders who deeply understand their market and customers have a huge edge. Investors will ask: Do you know your stuff better than anyone else? Have you lived the problem you’re solving? For example, when I invested in Algolia, I knew the founders were obsessed with search and had the technical chops to back it up. - Execution Ability:
Ideas are cheap—execution is everything. Investors look for evidence that you can get things done. Early traction, even small, is a strong signal. If you’ve already landed a few paying customers or built an MVP that’s gaining traction, that’s gold. - Team-Building Skills:
Can you recruit and retain top talent? A founder who can attract A+ players is far more likely to succeed. Investors know that startups are built by teams, not individuals, so your ability to build a strong team is critical. - Coachability:
No one expects you to have all the answers, but they do expect you to listen and learn. If you come across as arrogant or unwilling to take feedback, that’s a huge red flag. Investors want to work with founders who are open to advice but still confident in their decisions. - Commitment to the Journey:
Are you in this for the long haul? Building a SaaS company to $100M ARR takes 7-10 years, minimum. Investors want to know you’re not going to bail when things get hard or when a quick acquisition offer comes along. - Salesmanship:
As a founder, you’re always selling—whether it’s to customers, employees, or investors. If you can’t sell your vision in the pitch meeting, it’s unlikely you’ll be able to sell it in the market. Investors are looking for founders who can close deals and inspire confidence 79. - Focus and Prioritization:
Startups fail when founders try to do too much at once. Investors want to see that you can focus on the most important things and execute relentlessly. If you’re pitching a laundry list of features or markets, that’s a red flag. - Authenticity:
Investors can spot a fake a mile away. Be real about your challenges, your vision, and your goals. If you’re overly polished or evasive, it’s hard to build trust—and trust is everything in early-stage investing.
Ultimately, investors are betting on you as much as they’re betting on the idea. They’re asking themselves: Do I believe this founder can take this company all the way to $100M ARR and beyond? If the answer is yes, you’re in a great position.
