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Thrive is set up by Funding London, a venture capital company bridging the finance gap for early stage businesses based in London. With over a decade’s experience in supporting the startups of London through a variety of funding vehicles, Funding London sensed a need to illuminate the ever-evolving scenario of London’s early stage businesses.

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Perceptions · 29 March '17

How to spot an exceptional start-up leader.

Professional investors look for promising start-ups and most start-ups look for funding their dream initiatives.

Since, most investors (e.g., venture capital firms, angel investors and family offices) are people with accounting background and carry out their own due diligence, they naturally look for solid business plans and financials of the start-ups they’re interested in investing. But, they miss out on the most important attribute of any successful start-up – the background and characteristics of the start-up leaders.

Many professional investors forget that many of today’s iconic companies (Apple, Microsoft, Oracle, Facebook, Amazon and Salesforce.com) didn’t start with pages and pages of financials, but with exceptional leaders with visions.

So, how do smart investors spot exceptional start-up leaders from run of the mill entrepreneurs? Here are some clues.

In my experience of working with and advising  start-ups, who became iconic companies, I have found that there is no shortage of great ideas. But, a great idea does not make a great start-up!

All most always, a great start-up is led by a smart leader. What all good start-up leaders have in common is that they’re all authentic and true to themselves. They are self-aware. They never stop being themselves and they know how to be right for the businesses they lead and the people in them.

Knowing the business basics may seem a no-brainer, but I have met many entrepreneurs who simply don’t have the fundamental grasp of how to run and grow businesses. Many run of the mill entrepreneurs love the products they created and are often good with customers, but they are facile with what it takes to run a successful start-up.

Great start-up leaders create enduring businesses with meaning, purpose and vision that energises the people they lead, whereas run of the mill entrepreneurs try to create businesses to support their lifestyles.

Building relationship with key stakeholders is critical, because no good start-up leader can build a business of any scale doing it alone. Good start-up leaders hire people who are as good as or better than themselves, and allow their people to flourish. Whereas run of the mill entrepreneurs hire the best people they can find, often overselling their companies during the hiring process, and then micromanage them. They don’t inspire the people they’ve managed to hire, instead they irritate with their behavioural traits.

The outcome: talented people leave and these run of the mill entrepreneurs end up with unusually high turnover of people.

Good start-up leaders are focused! Whereas run of the mill entrepreneurs are inherently selfish and greedy. There is nothing wrong with being selfish and wanting to make money, but selfishness isn’t enough to create a successful start-up business. Being ‘selfless’ means being dispassionate enough to do what is right for the business even if it isn’t one’s personal preference. Good start-up leaders put themselves in service of the business, not the other way around.

Run of the mill entrepreneurs follow practices and procedures from their previous jobs to respond to the changes in the marketplace. They attempt to lead by intimidation, bossing people around, patronising and manipulating others. At best, they get the job done, make some money only for themselves and move on to the next opportunity to fund their lifestyles. But, most commonly they ruin their companies along with the careers of many people who came to work for them.

Great start-up leaders, by contrast, cope with changes in the market place. In fact, iconic start-up leaders don’t wait for changes in the marketplace; they initiate changes in the marketplace.  They achieve their vision by motivating and inspiring people around them, moving them in the right direction by appealing to basic, but often untapped human needs, values and emotions.

Exceptional start-up leaders don’t create followers; they create more start-up leaders!

Now that you know an exceptional start-up leader from the run of the mill entrepreneurs – ask yourself: how many start-ups  that I invested in, have exceptional leaders?