Professional backgrounds matter less than three characteristics when screening for a startup founding team, says Magnus Grimeland, CEO and founder of global early-stage VC firm Antler, which evaluates around 50,000 entrepreneurs every year and ultimately invests in about one per cent of them.
Speaking at the Investment Magazine Fiduciary Investors Symposium on Wednesday, Grimeland said Antler looks for whether people have a “spike” or an area where they excel better than most others, whether they have drive, and whether they have the grit to keep going despite difficulty or failure.
Intrigued, session chair Laurence Parker-Brown asked how it was possible to screen for these things, which sounded like traits one could only learn after knowing someone for years.
“The way we do this is actually we do spend a tremendous amount of time with the founders before we invest in them,” Grimeland said. “So they are literally in our office for about three months working on building the business before we decide whether we are going to invest or not.”
But for those without this luxury of time, there are quicker ways to check for these traits, he said. A jumpy CV of many short-term endeavours might demonstrate a lack of grit, for example. A person’s spike can be ascertained in conversations about what he or she is particularly good at.
“First of all, if they don’t know their strengths, that’s a strong signal that they don’t have a clear spike,” Grimeland said. “You can start kind of probing around that.”
His words carry some weight. Grimeland is the founder of Zalora, a fashion e-commerce company that was acquired by Global Fashion Group and rolled out over 26 countries. Advisers to Antler include Todd Ruppert, former CEO and president of T. Rowe Price, and Lawrence Summers, former Secretary of Treasury for the Clinton administration.
Tapping into the world’s talent pools means being open to diversity, he said. At Antler, 37 per cent of its invested companies have a female co-founder. And of these companies, 80 per cent have a female CEO.
In the United States more broadly, only three per cent of all venture capital is given to female entrepreneurs, Grimeland said.
Building companies with people from more than 70 nations has led to the emergence of companies solving a wide range of important problems, he said.
One, Skyqraft, flies drones around power lines to look for fallen trees, using AI and image analysis technology to call for maintenance and avoid forest fires. Another, Breathonix, has developed a 60-second Covid-19 breath test. And PowerX uses adaptive electrical sensors in commercial buildings or homes to monitor daily habits and reduce electricity usage.
For organisations seeking to attract disruptive minds, the interview and sourcing process needs to make the organisation’s mission clear, Grimeland said, as disruptive thinkers and creators want to relate to what they are doing and believe it is for a good reason.
Having an internal ‘sandbox’ that allows new ideas and projects to be tested among a small group of customers before it is rolled out more broadly is also a powerful concept, he said.
Organisations should also have a “relentless focus on learning,” he said.
“So we do post-mortems whenever we go through a specific process,” Grimeland said. “And then we look at that and see how can we update the way we do this next time. What did we do wrong? What we do we do right? And then we bring in people from all parts of the business, the hierarchy and globally, to ensure that that is captured in the right way.”