Why every startup needs a hustler, hacker and a hipster

When assessing the suitability of an early-stage business for possible investment, the makeup of its founding team weighs heavily and is all-important.

In a new business, it is the initial idea that one is investing in as much as it is the business itself. Obviously, the business should be solving a real market problem; have an addressable market and know who its customers are going to be. But having a strong founding team is just as crucial and, in many ways, is the lifeblood of any business.

A founding team with the right mix of hustle, industry knowledge and swagger can be the “make or break” factor in determining long-term success.

Many businesses fail not because the concept is not a good one or because it doesn’t have a place in the market.

Businesses often do not enjoy longevity and make it past the first couple of years of operations, primarily because the founding team lacks the necessary business acumen, passion or skills to execute efficiently and with real purpose. Often, the secret to success comes in three very clear key and definable attributes: you look for a hustler, a hacker and a hipster.

Seed Space founder and managing partner Dirk Steller

Let me explain.

The hustler is the chief salesman and the “go to” businessman behind driving the business and the idea forward. As the salesman in chief, the hustler gets the deals done and keeps the business ticking over.

The hacker is the one developing the new technology and the indestructible backbone of the business.

The hipster is the one that makes the product look market ready, sleek and cool. They bring design and flair to the product that flows through to the overall business.

When these three key attributes work together, and in harmony, the combination can often lead to incredible success.

Having someone driving the business forward; another with the capability to develop the tech; and a third being able to give the business a ‘wow’ factor – it really is a combination that can turbocharge growth, scalability, profitability and longevity.

A large addressable market

Having a great founding team needs to run in parallel with the business solving a real market problem and it must have a large addressable market, ideally with global scalability.

To be successful, there needs to be a sizeable number of potential customers to target. In addition, the business needs to consider what sort of head start it has on any comparable competition.

What is the traction the business is achieving in the early stages of operation and is it repeatable elsewhere?

Venture capitalists are always looking for companies that are significantly differentiating from their competitors and for teams that have a track record of success in the same market segment to carry the business plan forward.

Find the experience

VCs also look for teams that have significant ‘in market’ experience. It doesn’t necessarily have to be the founder with this experience; it could be an advisory member or a board member or someone close to the founding team. Having someone with this experience is vitally important as the business grows and scales, and even more crucial when the leadership team begins to look for growth capital.

It’s logical that any business worthy of investment will need to have solid financial forecasts and a strong, defendable balance sheet. These forecasts need to show, in forensic detail, the market segment its operating in; a realistic snapshot of potential target customers; the pain points in the market segment; a forecast on how the business is going to grow and a level of due diligence (with multiple scenario planning and modelling) that is going to give comfort to potential investors.

Get investment ready

Very early-stage seed investment normally comprises ticket sizes of up to $500,000 in a first investment, and up to $3 million in a follow-on investment, with the size or the proportion of that investment of the total capital raise of a company varying from business to business.

Ultimately, it depends on the size and stage of the company and the speed in which it is growing, as to what sort of valuation one would put on a company.

As any early stage business begins to find its rhythm, it is crucial that businesses make themselves investment ready.

Some of the absolute must haves include: a minimum viable product; a solid experienced team; a corporate structure that will allow external investors and a line of sight to customers (or who they could be).

For any founding team, while it’s essential to have the building blocks for success, it’s often more important to know the business and the industry segment in which it operates, in granular detail, so as to be crystal clear about why it deserves to be invested in by professional investors.

* Dirk Steller is the founder and Managing Partner of Seed Space Venture Capital