It is difficult to make metric-based investment decisions in respect of every potential portfolio company.  Some companies may have only been in operation for less than a year, and analyzing traction is often challenging.

Therefore, assessing the quality of the founding team, the people behind the idea, is essential when we make an investment decision.

At Openspace Ventures, we invest in only a handful of startups each year – which comes up to less than 1% of all the startups that we meet.

So what do we look out for in founders?  We discussed this one morning at OpenForum, and in this article we share the team’s thoughts coming out of the OpenForum session.

Intellectual Honesty

Being a Founder is tough. Most of the time, a Founder’s idea is a contrarian one, so there will be countless situations where others disagree with the Founder’s views. Therefore, it is important for Founders to have the utmost belief in their vision. However, such strong conviction may also be a double-edged sword, and it can be a challenge if Founders are blinded by it.

Having intellectual honesty means having the ability to make decisions based on facts, as well as having the courage to show vulnerability and admit when one is wrong. It is simple for Founders to dismiss criticism by claiming that the critics “can’t see the big picture”. However, if the criticism is supported by facts and data, the Founders should try to understand the logic behind the criticism and respond with a counter-argument that is also supported by facts and data. If the criticism is indeed valid, then this is actually beneficial to the Founders because it helped the Founders notice a blind-spot which they were not aware of.

Intellectual honesty is particularly crucial when responding to criticism internally. Due to the ever-changing nature of a startup, it is unlikely that Founders can be experts in all aspects of a company. A technical Founder, for example, may not be best person to make decisions on marketing or finance. If Founders surround themselves with “yes-people”, the company’s growth and sustainability may be hindered by not addressing issues early-on. The best startups that we have seen have an environment where both leaders and employees are able to learn and improve.

Source: Yukbisnis.com

Grit

One of Walt Disney’s famous quotes is – “the difference between winning and losing is most often, not quitting”. This resonates well with any Founders of successful companies: they were able to succeed because they kept themselves in the game and found a way to win. Starting a company is extremely difficult, especially when the Founders are challenging the status quo. However, Founders with grit will be able to embrace all challenges, work incredibly hard to overcome them and follow through with all commitments.

Whether Founders have grit can be seen when he or she is under adversity. Some Founders would crumble mentally and blame others for the state of the company. Some would hustle day and night, further motivate their teams, and would never accept failure as an option. A startup will only go as far as the Founder wants it to go. If Founders give up, that may mark the beginning of the end for the startup.

Source: Entrepreneurfail.com

Ambition / Vision

It goes without saying that the Founders we back must have an ambition to conquer the space they are in. Having a vision also provides the entrepreneur with a picture of success which is very important during periods of uncertainty or roadblocks. Putting it another way, entrepreneurs who have the grit to get through tough times all have a clear vision and are very passionate about it.

Having a clear vision is not only beneficial to Founders personally, but also critical to growing their startups. Having a clear vision helps to unify the organization and motivate employees. It also serves as the foundation for business planning and KPI-setting. A startup’s product or business models may evolve over time, but the vision will probably remain as it is: the ultimate goal that the company is trying to achieve.

It is also important that Founders can convey their vision persuasively to both external and internal parties. After all, Founders need to charm employees into fighting for their causes and attract investors into backing their ambitious goals.

Source: Entrepreneurfail.com

Founders are the DNA of their startups

Building a startup is tough. It is like running a marathon but having to sprint the entire duration. It is like flying an airplane while constructing it mid-flight. If Founders don’t have the intellectual honesty to evaluate their own startups, or if they don’t have the grit or vision to push through hardships, their startups may have difficulties achieving sustainable success.

It is straight forward to identify Founders that have the relevant technical knowledge, but more challenging to find Founders that have these intangibles. At Openspace Ventures, we strive to find Founders with these qualities, and we try to verify them with interviews and reference checks. For Founders that we think can improve on certain aspects, we would connect them with other successful Founders that are within our network, someone who have “been there done that”.

Over the past years, we have been fortunate to partner with ambitious and visionary Founders, who have intellectual honesty and grit. We understand the needs of these Founders and that is why we have an operations team dedicated to maximize startups’ potential. From improving their product roadmap, to establishing their data infrastructure, to surrounding the Founders with the suitable management team, we have in-house domain experts to assist the Founders operationally.

From an investment perspective, we view our portfolio as an investment in our Founders, and we strive to go the extra mile to help them.  When our founders do well, our portfolio companies do well. And as an investor, this is what we hope to bring to the Southeast Asia startup ecosystem – a network of successful founders and companies to help promote Southeast Asia’s relevance in the world.