What Qualities Investors Look for in Founding CEOs

15 Aug

By Danielle Silva, Director of Research and Innovation, LSN

Many entrepreneurs make the assumption that investors are solely looking at their technology when they consider taking a stake in their firm. However, this is typically very far from the truth; at the end of the day most investors are investing in the individual and the management team – not the entrepreneur’s technology. This is why almost all investors require a number of face-to-face meetings prior to making an investment. As traditional sources of capital in the life science space continue to dry up, it is becoming more and more important for CEOs to stand out and show investors both their personality and the qualities that will make them a successful founder.

One of the most important things investors look for is a clearly defined vision. A startup’s CEO needs to not only have knowledge of their target market, but also needs to fully understand the individual customer’s problem and how to tackle it. The biggest turn-off for an investor is the “panacea presentation” that details the 27 indications a pre-clinical asset has the potential to cure. You need to have a targeted and focused concept of exactly where you are headed in the market. This vision is especially important because as the company scales, the founder needs to ensure that the company does not stray away from it’s core competency and mission, and that everyone in the firm is aware of the CEO’s vision. Nobody wants to invest in a schizophrenic business.

Founding CEOs also need to have the ability to surround themselves with strategic partners that are not necessarily investors in the firm. Forming these strategic relationships early on can be invaluable down the road. Founders should, however, also seek advisors that are willing to put skin in the game, because advisors who have a stake in the company will represent a vote of confidence in the eyes of other potential investors. Furthermore, founders need to be able to both find and retain talented individuals to help them build their companies, not only give advice. Networking with talented people that have a passion around your target indication or technology can help CEOs identify senior professionals that they can bring in later in the development of the company to fill roles necessary for growth. This is vital because, at the end of the day, the investor is investing in people.

So what does this all mean for founding CEOs? If you do not possess these qualities, find someone who does! The business side of advancing your technology should be managed by someone who can manage the networking role and show investors a focus on getting to market above all else. You should always embrace the opportunity to meet investors in person, but make sure you are prepared to do so. Also, you will always be more compelling in a one-on-one meeting where you can start a real dialogue, rather than lecturing to a room of potential investors. Speaking with (not at) investors at length about your company and your vision will not only help you demonstrate these qualities to the investors, but will also help you determine if the investor posses traits that will help you both work together in the future.

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