Inflation and ongoing war in Europe means that entrepreneurs can expect a straightened market this year.
With less money sloshing about, it’s more crucial than ever to dial into what investors want. We assembled a panel of experts to find out what founders can do to loosen the purse strings in 2023.
Depth - and fire in the belly
Rishi Khosla OBE, co-founder, OakNorth Bank:
“The headwinds you face when building and scaling a business will pick up in 2023. So, what’s the most important thing you need to thrive in a market like this? Hunger. This is the single most vital attribute in founders (by far). It’s never more crucial than when you are starting out. Going from having nothing to something is like lifting mountains, it doesn’t happen unless you have that fire in the belly.
“As well as hunger, you need depth. That is, the ability to unpick a specific problem, customer or category. Finally, there’s character. Does this person understand that great companies are made by treating teams, clients and suppliers well? If they don’t, I’ll pass.”
Founders take note: Feed the hunger. Find the depth. Don’t compromise.
Someone who can build trust
Kerry Baldwin, managing partner, IQ Capital:
“For us, founders must be bold in thought. Our deep-tech founders need to attack a massive global market and their offering must have strong IP at its core. Beyond these things, I’m looking for a connection – specifically, trust.
“These relationships are about long-term goals. Is this founder or CEO the sort of person to talk up their successes and downplay their failures? It’s imperative to bring honesty to the table. After all, funding is about more than finance. I want to know what the blockages are, where the business might be hurting. That way we can use our network, connections and portfolio to help fix any problems any of our founders are facing.”
Founders take note: Be honest. Sugar-coating CEOs are bad for growth.
Mo El Husseiny, Founder and Managing Partner of Ventura Capital:
“Founders need to find the right problems to address. We are about to have a tough two years. There will be capital scarcity, a decrease in disposable income – but yet the world will turn again eventually. Some people might think that this isn’t a great environment to start a business, but that assumption isn’t absolute.
“To thrive in this period, founders need to unearth the right place to focus their efforts and deploy their energy. As some issues worsen, the opportunity on the other side to alleviate them will increase. For example, consider the need today for a solution to the cost of living crisis, or to accelerate the energy transition. Bigger problems mean more satisfying challenges.”
Founders take note: More problems mean more market opportunities.
A founder who fits the market as well as their product
Dr Lauren Lentz, general partner, Revent:
“Founders have to be convincing enough to sell a business before they have gone ahead and created one. So, as well as product-market fit, we think about founder-market fit. There must be something about this person that enables them to see what others can’t.
“They need to understand a specific problem well – perhaps because they have faced it themselves. Maybe a founder has worked in an industry for a long time and can see a way to re-think it. Or they’re a scientist who’s been plugging away at a research problem and realised that there is a gigantic commercial potential. As well as this, they must be capable of inspiring others.”
Founders take note: Find a way to move others with your idea.