The importance of a good startup CEO
At Fellow Funders we always keep two aspects in mind when dealing with any startup or SME: the quality of the team and CEO.
First contact with the startup CEO
The first thing we do when a company comes to us for financing is having an interview with the CEO. Afterwards, we have a second interview with the entire management team of the company. Through these interviews we know how committed and involved they are with the project and if they are prepared to adapt to the circumstances. We want the company to be able to change the company’s roadmap, clearly knowing the final goal. The first interview is extremely important to us for two reasons:
- We can verify if we are going to be able to work together. The process of searching for financing generally lasts 2/3 months and during this time there will be “frictions” related to significant milestones such as the valuation of the company, the due diligence or the definition of the partners’ agreement.
- When performing the Fellow Funders scoring, based on intelligent algorithms, the company must obtain a score higher than 65/100. The composition of the team, its adaptability and the technical capacity of each member are some of the aspects that are valued in this scoring, although these aspects of the team are always subordinated to the level of commitment demonstrated by each member.
The importance of CEOs and their qualities
Although the team is important, one of the factors that we believe is crucial is the quality of its CEO, the person in charge of setting the course, watching over the crew, taking the helm and sometimes helping to set the sails… The CEO is both the captain of the boat and a cabin boy.
Recently, among the many readings that come to Fellow Funders we received an article from Harvard Business Review about the qualities that a good CEO should have to lead a Fortune 500 company. We want to share with you a couple of ideas and see if they can be adaptable to a Startup CEO:
- “There is a common false stereotype that a successful CEO must be a charismatic leader, highly educated, with a strategic vision and a high ability to make decisions under pressure.”
Having a strategic vision is not enough to be a good CEO? Is it not necessary to have higher education to be a good CEO? Is a high capacity to make decisions under pressure desirable but not essential?
How many times,when we meet a startup CEO, we see a visionary, a strategist and an executor, but a person without entrepreneurial spirit and vision? We shouldn’t forget that when someone receives funding from investors he/she stops being a Visionary Entrepreneur to become aBusiness person. Do all Startup CEOs internalize this thought?
- “At the end, the success of a leadership is not something unchangeable, unachievable or exotic, but responds to the perfect combination of 4 key factors: decisiveness, ability to involve stakeholders (the team), adaptability and reliability.”
So, is it necessary to involve the team in taking decisions and make them feel part of the company’s future? Reliability, understood as the trust of the team and investors,is essential or not necessary at all?
Does being adaptable mean not having a long-term plan but reacting as the circumstances change, and does the ability to make decisions mean that the CEO must make decisions unilaterally or must he/she involve the team?
At Fellow Funders we believe in the need for startup CEOs, as they are the ones who can unite the team and make them feel part of the company’s development, who can make quick decisions with a long-term horizon, who are reliable and trusted, and who can adapt the vision and business model as needed.
Do all CEOs have this vision internalized or do they feel like visionaries or castaways on an island? Do they feel like business people or will they continue to see themselves as entrepreneurs for the entire association with their company? Each CEO will have his/her answer and vision.
At Fellow Funders we keep thinking that equity crowdfunding investment is an interesting product. However, we must take into account the clear need for portfolio diversification and the risks involved.