By Paul Crick, Founder, The Elevate Partnership
People often play the biggest role in whether a start-up succeeds or fails. Investors and co-founders must intentionally evaluate a team before making any decisions.
Symptoms of Being Human
The leadership capabilities of a founding team are critical in unlocking a startup’s full potential. From the beginning, founders face a series of people-focused decisions that often come with inherent tensions. Who should be a co-founder—friends, family, former colleagues, or strangers? How should equity and rewards be shared among the founding team? Who should take on which roles, and why? What is the succession plan, and when should it be triggered?
These tensions only become evident over time as the startup encounters more complex challenges. Founders may struggle to see their own biases, blind spots, or limitations, which can lead to poor decision-making and ineffective leadership. This often appears as defensiveness and impulsive reactions to external events rather than thoughtful, deliberate responses.
These issues often show up in several ways. Vital conversations that need to happen may be avoided. Problems within the business or team may become cyclical and harder to resolve. Conflicts may escalate and spill into public settings, affecting personal lives. High employee disengagement and low trust can take root and persist. Deadlines slip and output quality falls, even if the team is talented. Team leaders may start focusing on protecting their interests rather than contributing equally and leading the organization towards its goals.
On a personal level, long-standing friendships and relationships can deteriorate, and the health and well-being of individuals can suffer. Founders invariably bear the weight of these ongoing people-related challenges.
Good Idea, Bad Process
From an investor’s perspective, these human challenges can be hard to spot. Few investors have a structured process for evaluating the people behind a startup idea. For instance, during the pitch process, the focus is usually on the strength of the idea, the quality of the presentation, and the track record of the team. Investors often concentrate more on business growth than on the people responsible for driving it. However, evidence shows that effective leadership leads to better outcomes.
Self-management and interpersonal skills are vital for founders. They need to prioritise tasks, manage their time well, and maintain their well-being to lead themselves and their teams effectively. If factors like creativity and emotional dynamics are ignored when assessing financial performance, they can later have significant negative effects.
The encouraging news for founder teams and investors is that these skills can be developed and nurtured. Doing so can help manage internal struggles and balance the demands of leadership. This approach can enhance well-being, unlock potential, and create a lasting, positive impact on those involved.
Entrepreneurial pressures will always be present, and expecting perfect leadership through uncertainty is unrealistic. However, decisions about people, particularly those that shape the foundation of a startup, need to be made with intention, not by default. This approach helps lay the groundwork for building a sustainable and profitable business.