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One of the best parts of my role as Programme Director at Baltic Ventures is the privilege of having conversations with knowledgeable and deeply passionate people.
I can’t think of two people who fit the bill more than exited founders Carl Wong and David Woods, who are both part of the angel syndicate at Baltic Ventures and play a crucial role as primary coaches on our annual accelerator programme.
Ahead of us launching applications for Accelerator 2024 on 1st May, I caught up with the pair to pick their brains on what they look for in a founding team before deciding whether or not to invest in a startup.
Carl Wong, exited founder, angel investor and non-exec director at Baltic Ventures
It’s all about the founding team
We hear this statement time and time again – but what does it mean? Carl and David explain that, during their initial calls/meetings with founders, they’re not delving deep into the product. They’re sizing up the team’s passion, engagement and chemistry. Do they communicate well together and are they on the same page?
Do they have complementary skill sets? Can the duo ‘see’ themselves working with them in the medium to long term. There’s plenty of time to discuss the product at a later stage but that initial call isn’t it.
“It’s all about the founder and chemistry,” David Woods says. “I’m not going to learn all about your product in 15 or 20 minutes, you need to sell me the passion and the drive first and then we can take the time to delve into things deeper.”
Like many investors, Carl and David believe that a founding team made up of 2 or 3 people is more attractive, particularly if they have complementary skill sets. But what can solo founders do to fill in those gaps?
“Be open and honest and tell the truth,” the pair unanimously agree. “Say that you’re good at X but not so great at Y. We know it’s not easy to stand up in front of people and say that, but no one is good at everything.”
Carl and David sold Liverpool-based tech scaleup LivingLens to customer experience tech giant Medallia for $26m in 2020. The platform captures and analyses video content via speech, actions and sentiment, translating the content into business insights.
“We certainly weren’t good at everything when we were running our business,” Woods adds. “I’ve lost track of the number of times Carl and I thought ‘we need help’.”
Deep understanding of the problem
If you’re creating a solution that’s going to be used by brain surgeons, you don’t necessarily have to be a surgeon yourself, but it definitely helps! What Carl and David and other angel investors typically gravitate towards is a founding team who’ve experienced the pain they’re trying to solve.
“Do they have a deep understanding of the problem? And can they articulate it with conviction, in detail and from a point of experience or expertise?,” Carl says.
“You may not have all the answers about how to commercialise and scale it, but can you tell me all the ‘geeky’ details of the problem, why it caused you pain and how your solution is going to solve that pain for others.”
Traction, traction, traction
In the lexicon of startup buzzwords, “traction” reigns supreme, often heralded as the ultimate litmus test for success. A word loved by investors but often ‘feared’ by early-stage founders, there’s a misconception that traction always means revenue. At the early stages of a startup, this doesn’t need to be the case, and it certainly isn’t always a dealbreaker.
If you are generating revenue, or even better, repeatable revenue then that’s obviously a massive tick. But if you’re earlier than that in your journey, then investors will often want to know that your product or solution is “out there in the world”.
“Is it in the hands of clients, users or customers?,” Carl and David say. “It doesn’t have to be paid revenue right now but can you see a pathway to commercialising it and do you have evidence to show that people will pay for it?
The word hustle often comes with both positive and negative connotations, but Carl and David insist that it’s something crucial to a founding team, mixed with resilience and entrepreneurialism. The world is full of great ideas, but getting your product into the hands of users, however clunky it may be, is incredibly important.
“You can’t just be good at building a product and improving on it,” Carl insists. “You need to be brave and be out there in the world convincing people – and that’s a very hard thing to do. Showing us that you’ve managed to do that once, twice or three times – that’s a big tick.”
Decisions at Pace
Ultimately, the road to building and scaling a startup is never going to be easy and it’s guaranteed that countless mistakes will be made along the way. Oftentimes failure itself isn’t the roadblock, it’s the speed at which you fail.
“We speak to lots of early-stage founders and it’s clear that some are acting and moving quickly,” the pair go on to say.
“They can tell you pretty clearly in the last few quarters these are the big milestones we’ve hit and this is what we’re going to achieve in the next few quarters. And then there are those whose timelines stretch across 6 to 10 years. The speed at which you move is important.”
