Love your entrepreneurs but don’t fall in love with them

A good entrepreneur has to be charismatic. There is simply no other way for them to get people to believe in their vision. Investors, partners and employees all fall for the charm an entrepreneur spreads all around him/her.

This is more than a major skill for the entrepreneur but a perquisite for a startup’s success. That does not mean that all startup founders must have that skill, but at least one of the founders would need to have it in him/her for the company to succeed. That charisma may be applied to raise funds, to recruit employees, to get industry experts onto the advisory board and of course to sell a half baked product to prospective clients.

Having met tons of different startups and founders, a lack of charisma is one of the primary reasons for bypassing an investment opportunity. You see, as an early stage investor, you don’t get the benefit of the later stage investors. While they can judge a company by it’s growth, scale and numerous financial parameters such as MRR, us early stage investors invest mostly on the vision and the founders ability to make it into a reality. To take a vision (especially great ones) and form it into a viable product takes funding and a decent team. The path to get both? A founder’s charisma and ability to get people to follow/believe in a shared vision.

But charisma is a double edged sword for investors. While you want to invest in highly charismatic founders, you don’t want to overlook the vision, the market and the challenges they will be facing. The best way to know you are not oversold on a founder’s charisma is to look at the company presentations offline at least a day after meeting them. Does the idea still make sense? IS the problem the company is trying to solve a real pain or just a nuisance? What are the keys to success here? How crowded is this space? Do the founders have the skills to deliver a great product to the market?

I’ve seen too many cases, where the day after the meeting and a cold analytic look into the company, caused me and my partners to decline a deal. If you feel the need for a metaphor here, think of this as waking up the day after a great party only to find out the guy/girl you hooked up with does not look as good as they did the last night :)