Ending Soon! Save 33% on All Access

5 Qualities VCs Look for in Your Startup Team Investors are interested in your great idea but more interested in the talent and cohesion of the people charged with making it profitable.

By Tx Zhuo Edited by Dan Bova

Opinions expressed by Entrepreneur contributors are their own.

If you're like most founders seeking funding, you're busy checking boxes to make sure your startup is the perfect storm to attract investors. Game-changing idea? Check. Scalable model? Check. Thriving user base? Check.

But if you just rounded up the first five people you found at an entrepreneur meetup and hustled them into a co-working space to build your company, you may run into some trouble landing an investment.

Contrary to popular belief, VCs aren't always looking for the next big thing. They're looking for the next big team.

The team is the foundation of any successful startup, the fixed point from which all ideas and developments originate. Without a strong foundation, a startup will be blown and battered by the changing environment and, ultimately, crumble.

When I met with a particular startup in the mobile video space, I immediately knew that I had to invest. The founding team was comprised of a serial entrepreneur, a CTO who had scaled a small business to hundreds of millions in revenue and a talented business development person with relevant industry experience.

I recognized right away that they were an all-star team. As I got to know them, I realized they also had a natural chemistry, mutual respect and an acute awareness of one another's strengths and weaknesses.

Related: The Four Things VCs Look for In a Startup

Unsurprisingly, this company has become a standout in our portfolio, but what exactly does it take to build an all-star cast? Here are five things I look for in a winning team:

1. Impressive talent.

Late-stage companies generally have the processes and personnel in place that allow each business unit to stand on its own. But in the early stages, each member of the team plays a critical role. You need a team of experts who can sell, market or design circles around their peers. When I see a team jam-packed with impressive individuals, I know I'm onto a winner.

2. Mutual respect.

Even if you and your co-founders are completely different people with diverse backgrounds and skill sets, you need to be able to find common ground and cultivate a spirit of deep respect. Mutual admiration creates an environment where you can communicate, overcome problems quickly, work toward shared goals and share in your mutual success.

Related: The Five Things You Must Do Before Approaching Any Investor

3. Experience.

There's a stark difference between founders who are doing it for the first time and founders with multiple companies on their résumés.

Michael Todd, co-founder and CTO of Victorious, is a perfect example of someone who impresses with his ability to leverage past experiences. Regardless of the time crunch or changing conditions, Mike is always calm and keeps his end goal in sight. This comes from having vast experience -- anyone can tell it's not his first rodeo.

4. Adaptability.

The difference between an A team and a B team doesn't come down to the quality of the idea it's pitching; it's whether the team can carry that idea to success. Plans, trends and challenges change all the time, so a team that can adapt together and follow the customer (rather than clinging desperately to the original idea) will be suited to startup life.

5. History.

You can tell immediately if a team has a history of working together. The founders have chemistry, have unspoken understanding and complement one another's strengths.

Bitium is a great example of this. Its founders worked together for many years at Fastpoint Games. When I met the company for the first time, everything ran like clockwork because everyone knew one another's working styles inside and out, allowing everyone to focus on the tasks at hand rather than getting distracted by interpersonal dynamics.

So before you go pitching your awesome idea, make sure you have the right team supporting it. You need true rock stars with experience, history and chemistry to build a successful business. That's what's going to make your startup stand out to investors.

Related: Does Your Team Have the Right Stuff to Attract Venture Capital?

Tx Zhuo

Managing partner at Karlin Ventures

 TX Zhuo is a managing partner of Karlin Ventures, an L.A.-based venture capital firm that focuses on early-stage enterprise software, e-commerce, and marketplaces. Follow the company on Twitter.

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

Business News

Did OpenAI steal Scarlett Johansson's voice? 5 Critical Lessons for Entrepreneurs in The AI Era

Did OpenAI steal Scarlett Johansson's voice? OpenAI has since paused the "Sky" voice feature, but Johansson argues that this is no coincidence. In response, Johansson delivers a masterclass for entrepreneurs on navigating the AI era successfully.

Business News

Apple iPhone 7 Users May Be Owed a Slice of a $35 Million Settlement — Here's How to Claim Your Share

Previous (and current, no judgment) iPhone 7 users may be entitled to up to $349. The deadline to file a claim is June 3.

Business Ideas

63 Small Business Ideas to Start in 2024

We put together a list of the best, most profitable small business ideas for entrepreneurs to pursue in 2024.


How Corporate Investment Helps Startups Deploy Technology Faster Than Ever

Financial resources, strategic alignment, access to expertise, market validation and operational support make this deployment possible.