In the startup world, the boss is usually also the founder. A quality founder is the most important criterion for investors in technology startups. And it is especially true for early stage companies. I like to compare it to a double-edged sword. On the one hand, they have expertise in their field - in technology, in fintech, in blockchain. On the other hand, they have to be able to connect this "hard" core knowledge to the business. Humbleness is also one of their important competencies. It is related to learning. Even a visionary doesn't have to have their head in the clouds; they can keep their feet on the ground. They can assess what is realistic.

A quality founder. This is the single most important criterion for investors in technology startups. And it's especially true for early-stage companies. Investors need to look at what qualities a founder has, what they have already done, and whether they believe they can turn their project into a profitable business. For start-ups, this is often the only indicator available to them. The company can't show any results yet, the product is just launching and the first customers are coming.

I like to compare the ideal founder to a sword that has two edges. On the one hand, they have expertise in their field - in technology, in fintech, in blockchain. As investors, we monitor these areas and quickly see if the founder's vision is in line with current trends. But on the other hand, a startup founder must be able to connect this "hard" core knowledge to the business. They should have a sense for business opportunities, be able to sell anything. Those who don't have these skills usually don't win.

If you don't learn fast, you're not a good founder.

We are always looking for a person who can learn quickly. Middle-aged founders who have spent years in a corporation sometimes have ossified egos and find it difficult to take criticism. In the startup world, where you need to quickly adjust the product according to positive and negative feedback, this is not at all appropriate. Of course, founders can be egotists, but they also need to be capable of self-reflection. Of themselves and of their product.

Speed of learning is one of the core competencies of a founder. Only by the PowerPoint presentations, by the pitch decks, we won't recognize this quality as investors. We always have to interview investment candidates, including key team members, several times - in person or via video call. Speed in general is an essential trait of exceptional founders. When a founder doesn't respond to our email the same day, it's a warning sign for us. Such a small thing, right? However, it is partly indicative of his mind-set, a general pattern of behaviour that is hard to change in the short term. Sometimes a candidate may think we're crazy at the first contact. But we may just be trying to provoke them or get them into action so that we can observe their immediate reactions. We need to know how they'll behave in tense situations.

It happens that we come across a sympathetic person who is smarter than us in a certain area. They can talk well, answer every question, even if their product doesn't impress. So as investors, we watch them from different angles. For example, it is also important to us what kind of a leader they are, and how they treat their team members. It's not good if they’re afraid of them, they need to be able to talk to them openly.

Founders with an inner glow

Humbleness is also one of the important competencies of a founder. It is related to learning. Even a visionary doesn't have to have their head in the clouds, they can keep their feet on the ground. They can assess what is realistic. We find that the best combination is when people are ambitious in what they want to accomplish, have an inner drive, a desire to make a difference. But at the same time, they're humble about what they want for themselves. A founder who from the beginning is just looking at how much they can make for themselves is not going to be the right one.

We sometimes ask founders if they want to be rich, or rather powerful or influential. It doesn't matter what they answer. It's not wrong for the head of a company to tell us that they want to be rich, and maybe add some explanation. Nor is it wrong for them to say that they want to have influence, that they want to change an industry. The worst is when they thinks about their answer for a long time. It's often obvious that they don't know where to go from there. And if they don't know what they want, they don't stand a chance against a problematic situation.

Don't let the founder just drain your energy

Appropriate competencies change over time and as the company develops. In the early stages, which is what we focus on at DEPO Ventures, a founder must be able to make quick decisions and respond promptly to customer requirements. They must withstand pressure from investors, permanently dealing with where to raise money for further development. When the company grows, adds new employees, the need for these competencies is lost. On the contrary, it can be an opportunity for people from corporations who have experienced a situation of certain stability and know how to navigate it better.

American investor Ben Horowitz says there are two different styles of leadership. One for the good times and one for the bad. The ideal founder should be able to do both. In good circumstances, he must be able to monitor feedback from investors and customers. However, when times are bad, they must suddenly make decisions very quickly and decisively. They are responsible for the whole team and decide whether the company can withstand the difficulties. In some of the companies in our portfolio, we have seen that founder members have been forced to take a number of unpopular steps, have been unpopular with the team, but in the end have managed to navigate through the crisis successfully.

If there are more than one founder, they need to act in harmony, respecting each other. We've dealt with a few situations where they've fallen out with each other. And that's usually the end of it. In our experience, there's about an 80% chance that the whole company will fall apart. The fish stinks from the head, and when the head starts to split, it's trouble.

Of course, choosing the right founder is always a subjective matter. Every investor has a different perspective. However, investors are in frequent contact with founders. They don't have to agree with them on everything, but they have to enjoy the collaboration and respect each other. They don't need to go out for a beer together, but the founder must not be the person who just takes energy away from the investors.