Last year, 2023, will be remembered in the tech world for massive losses, as 3,200 startups and over $27 billion in venture funding evaporated, not to mention the most significant U.S. bank collapses since 2008.
At the same time, venture investment into early-stage businesses declined significantly, with VCs undertaking greater due diligence and displaying reticence toward founders unable to signpost a clear pathway to profitability.
While investors seem confident that 2024 will see increased deal flows following a cagey 12 months and the accumulation of a lot of dry powder, the onus remains on startup teams to convince VCs of their backability.
In truth, many entrepreneurs — particularly first-time founders — will likely end the year disappointed. They continue to labor under the dual misapprehension that ideas are sacrosanct and that technical supremacy is the key to startup success.
Great ideas are commonplace, great teams are not
As Bill Gates famously said, “Intellectual property has the shelf life of a banana!” First, founders must understand that entrepreneurial success is not about the idea. There is no shortage of exciting business ideas out there; indeed, its multiple founders frequently experience the same lightbulb moments and go on to develop near-identical business propositions.
What makes startups more likely to succeed is the quality of the team, their ability to execute, and their sense of timing — the most inscrutable element of company building.
What makes startups more likely to succeed is the quality of the team, their ability to execute, and their sense of timing.
Like many seasoned investors, I’ve been preaching the virtues of “team, timing, and execution” for years. And yet, I still meet cohort upon cohort of founders who are strong on tech but need more fundamental company leadership skills and the requisite interpersonal skills.
Don’t get me wrong — technical prowess is undoubtedly essential, particularly when building enterprise SaaS solutions where “good enough” is not, in reality, good enough. However, it is only a small piece of the puzzle.
According to the Carnegie Institute of Technology, 85% of financial success stems from an individual’s soft skills and ability to communicate, negotiate, and lead effectively. These founders can deliver a clear message, show passion, demonstrate empathy, and build customer rapport, helping them identify product-market fit and master the sales process.
Likewise, they’re more likely to assemble winning teams and bring everyone with them on the difficult growth journey ahead because they understand what it takes to run a business and what it means to be a CEO — to hire, fire, and execute a business plan with laser-focused clarity.