Dynamics of Promising Deep Tech Founding Teams
If asked to name the most important factor that leads an early-stage startup to success, most investors would name something that relates to the qualities of the founders. Many search for evidence of product-market fit, but what moves an idea forward is a lasting founder-market fit. This implies that the founders have the right experience and alignment with one another to not only create something original, but to release it to a receptive audience and grow accordingly. The determination of whether a founder him or herself has founder-market fit is relatively straightforward, assuming previous experience is a match to current endeavors, but how about assessing the collective founding team? For a startup to meet its objectives, the dynamics of its founding team need to be in harmony.
Though the ability to fairly determine the strengths and weaknesses of the whole founding team is a bit of an art and isn’t always consistent, there exist certain attributes that lead to an informed assessment than not.
1. Soft Skills
The right soft skills, or the right combination thereof, lead to the best founding teams. Not everyone has to have identical personalities, but their attitude towards each other and their work needs to be complementary. Certain soft skills are sought after in early-stage deep tech founders, the first being the ability to problem solve. Handling complex technology requires an exceptional ability to navigate large problems quickly and effectively. All founders must be able to respond to intricate challenges present in research, production and sales appropriately: addressing shortcomings in order of importance, breaking down large problems into manageable components and delegating responsibility, and involving the team or other stakeholders when needed.
Founding teams must also be aware of the long time horizon inherent to the development of advanced technology, recognizing the need for a unified commitment towards an ultimate vision/mission. Because many years are spent on production before any commercial release, competitors inevitably emerge. Maintaining an unwavering projection of what the startup intends to achieve helps the founding team quickly pivot when necessary to maintain an edge in the market, a great stamp of self-awareness that excites investors.
2. The Right Expertise
The qualities investors want to see in deep tech founders are simple: highly sought after talent, relevant past experience and evidence of domain or functional expertise. For the team all together, longevity matters first and foremost. It’s a stretch to picture a set of undergraduate students-turned-founders running a successful quantum computing startup, at least not without the inclusion of an industry veteran or two. Founding teams capable of employing years of tailored experience are in a much better position to assess industry nuances, have likely carried forward the lessons of past successes and failures, and have earned a sense of credibility and trust when corresponding with potential customers, partners and investors.
Founding teams need to combine research and business expertise to be truly effective. Overly technical teams are masters of creating a distinct product, but fall short when it comes to getting said product to market. The reverse goes for business savvy founders with no research or technical background: they have the ability to interface with relevant stakeholders, but struggle to get a differentiable product to sell or can’t communicate exactly what value a product provides. Not every founder needs to be experts in both categories, but every founding team should.
3. Team Chemistry
Lots of founders meet for the first time and begin to work on a startup, the results of which are all over the map. There are newly formed founding teams capable of executing together perfectly, while others are disjointed and not fit for each other. For investors, a mitigant here is to find teams that have prior experience together. It could be that the founders worked before at the same company, sometimes more than once, or the two or three founders may have run a startup or previous business themselves. No matter the case, these founders have the advantage of familiarity. The mutual interest in reuniting again and again is a sign of trust, and leads investors to believe that these founders can maintain a positive relationship even as they navigate difficult challenges or short-term conflicts. Applied to deep tech, founding teams with a high degree of familiarity are largely more agile in growing the company, as this familiarity usually pairs with having spent many years in specialized academia, research or technology development.
4. Collaboration
Any advanced technology available in the markets today is at arm’s length away from the academic and research communities that serve to incubate and catalyze innovation. Founding teams with longstanding relationships with universities, research institutions and national laboratories are more closely positioned to access recent technological advancements, newly available talent or financial opportunities to facilitate experimentation and product iteration. If each founder has an existing network with collaborative partners, the startup can move towards credible product validation, which is sometimes the factor between a yes or no from an investor.
The dynamics of the founding team is arguably the most influential reason behind the decision to invest in a deep tech startup. The promises that an emerging technology presents might be enticing enough for some to overlook how the founders interact and view their business, which is why it’s a must for investors to thoroughly investigate the team.