An early stage investor on 3 core traits he looks for in founders

Disclosure: The author is the co-founder and managing partner at East Ventures. East Ventures is an investor in Tech in Asia. 

Photo credit: Kelley Bozarth

Often in lim-kopi (coffee) sessions, my discussion partners would bring up common questions like, “How do you pick a tech startup?” or “What do you look for when deciding to invest in a digital startup?” The short answer to this is that, “early stage investment is people business,” and long answer is, “there are 3 components that we evaluate when we are talking to the startup; People, Potential Market and Product (the 3Ps).”

One of the most critical components in this mix are the people working in the startup. I would like to further explain my view on this.

There are 3 core traits of founders that we dig for when speaking to potential founders East Ventures invests in — the founder should have integrity, be self aware, and paradoxical.

Integrity

There is nothing more valuable to the business than integrity. No amount of money would be able to buy that.

Most of our portfolio companies are founded by first-time founders with no entrepreneurship experience. Their median age is 24 years old. And most of the time, there is no material for us to work with when doing due diligence.

 There is nothing more valuable to the business than integrity.

The only way for us to judge them is through the way they engage with us, i.e. how they compose their decks, their email responses, how they conduct the meeting or even how they smile (yes, I feel very bad saying this).

Integrity always comes with secondary attributes such as honesty and sincerity.

We believe that most of the people who we invest in have a high level of integrity, and this will form the circle of trust. We then assume that the people recommended to us by the founders in our portfolio companies should be within their circle of trust, and should have a similar level of integrity.

Self awareness

A high level of self awareness is an attribute required to build a large and sustainable company. The founder who is self aware knows his own weaknesses and strengths. Recognizing his own weakness is the first step in filling this gap, either through self-development or by knowing when and who to hire to complement his skills.

Self awareness always comes with secondary attributes such as humility, lifelong learning and leadership.

Paradoxical nature

Building a startup is difficult and full of surprises. It requires a founder with a high level of flexibility, but who is still firm in his vision. This statement alone is a paradox.

Whenever I meet someone with these three traits, I often learn a lot more from them than they from me.