5 Traits VCs Seek In Startups

The panel for the VC round table at ICT Spring on 1 July 2022. From left: Max Mersch, Pierre Festal, Victoria Döringer, Lily Wang and Joy Sioufi (Photo © Silicon Luxembourg)

Major local VCs outlined what they look for when investing in founders and their startups during a panel discussion at ICT Spring on 1 July. Here are 5 key traits plus some emerging profiles.

Industry backgrounds

When it comes to the ideal founder there is no one-size-fits all, said the VCs present at the ICT Spring panel. Lily Wang, principal of Expon Capital Luxembourg said her VC seeks visionary founders, who have a deep understanding of the role of their solution within the industry it is aimed at. Max Mersch co-founder of Fabric Ventures, agreed that experience within the industry for which the solution is designed is critical, rather than “building tech for the sake of tech.”

Mercenary approach

Wang added that Expon also likes serious entrepreneurs, who know how to run a business. As she says of this kind of founder profile: “They are strong mercenaries and just go and execute.” 

A long-term view

When it comes to the startup, Mersch said that the long-term view is essential for Fabric Ventures. He said: “When you’re investing into a company, you’re basically backing  them for the next 5-10 years. So you really want to have someone with that relentless passion to just get your things done with a long term view as to where you want to get to, which is actually surprisingly rare to find, but when it does click, it’s amazing!”

Founders surrounded by a good team

No founder is an island and Joy Sioufi, partner at GP Bullhound, stressed the importance of being “well surrounded by advisors, investors and the key management team around you.” The best founders, he says, are those who try “to get at least the right advice at the right time by speaking with the others as much as possible.”

Master the pivot

Sioufi said that startups which manage to anticipate and stay long are also attractive. He said: “The startup basically does not have to be successful from day one with exactly the same idea from day one, things can pivot.” He added that companies can pivot while trying to find different funding rounds, undergoing or making acquisitions or launching new products. 

Wang observed that Expon Capital is increasingly seeking “strong female founders” and diversity in management teams. She said: “Because half of the end customer are also female.”

Mersch said that his firm was trying to develop a kind of fund for every type of founder. The latest initiative is Fabric X, a pre-incubation fund, the goal of which is to consider experienced founders wishing to develop new projects in the web 3 space. Mersch said: “We’ll have one per major geography.”

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