At Moonshots Capital, we receive 100–150 new company presentations a month. Over the course of a year, we will see well over 1,000 companies, but we only invest in a handful. So how do those companies stand out? Overall, we are looking for Extraordinary Leadership. Leadership can be tricky to evaluate, so there are a number of leadership characteristics that we review as part of our due diligence (and that I wrote about in my book, Take Command). With this emphasis on leadership, we lean in heavily (although not exclusively) when military veterans are part of the founding team — because millions of dollars are spent training military veterans in the art and science of leadership. But just knowing what it takes to be a great leader isn’t enough, which is why one of the key leadership characteristics that we look for is PASSION.
What really turns you on? Think about it … what causes you to jump out of bed every morning with a fire in your belly instead of dreading that train ride or Zoom call (for the foreseeable future) into “work?” What would you do if you could do anything in the world? Now, get ready for this question…Why aren’t you doing it?
You can always come up with hundreds of reasons for not doing something, but we look for people who constantly focus on the reasons they can do it. We’ve seen a thousand pitches from people from all walks of life and it is always clear when someone is approaching their start-up intellectually vs when they are truly passionate. A few key ‘tells’ that we look for to evaluate a founder’s passion are:
- Is it something they would do even if they had unlimited resources?
- Is it something they do not think of as work?
- Do they lose track of time when they are talking about the details and fully engaged in the business?
- Is it their sole focus?
Another clear indicator of a founder’s passion is their general positive attitude. Attitude is contagious. It infects those people around the founder in both their personal and business life. If the founder is upbeat, excited and energized, then that message comes through loud and clear. Whether it is co-workers, employees, friends or family, they will pick up on the founder’s passion. Our reference calls shed a lot of light on this factor. Conversely, if the founder is less excited, subdued, or purely intellectual about the problem, then that will be the message people get. That passion (good or bad) will infect all the people around them — both at home and at work. Those supporting networks will mirror that energy, so if they are passionate about what they’re doing and have an energized support network, they’re much more likely to succeed.
A great example of someone with a contagiously positive leadership attitude is Scott Kriz, co-founder and CEO of Bitium. I’ve known Scott since 2006 through three different start-ups and was fortunate enough to be the first investor (and Board member) in Bitium. Day in and day out Scott outwardly presents an upbeat and positive attitude — even in the most trying times…like losing a key account, having a great employee poached, or being weeks away from running out of cash. It is his constant positive and upbeat attitude that inspires his team, his investors, and even his customers to believe in him. I’m not saying Scott is fake or false; I’m saying that the authentic passion he has for what he is doing always grounds him in a strategically positive perspective that I’ve seen significantly impact outcomes. In the case of Bitium, Scott was able to build and grow the business in an extremely competitive environment and was ultimately successful in selling the business to Google.
Another key indicator of the level of someone’s passion is their perseverance. Are they going to give up at the first sign of adversity? Have they already been through several difficult times and kept their spirits up throughout? The start-up path is not easy, and the many twists and turns will undoubtedly be challenging. It takes passion to carry someone through.
What makes someone passionate? What’s the driving force? How do they define success? I think the most important parts of those questions are answered from within the founder. Too many people expend their life force trying to do what makes someone else happy. A lot of people allow others to set their goals for them. We urge our founders to figure it out for themselves and to not let others define it for them. A person’s ideals should drive them and keep them excited — Not because mom, dad, a buddy or neighbors think something is “successful”, but because it is something they really want personally. It is important to remember, you are the one that has to live your life — nobody else does. Understanding the founder’s origin story — why this business exists, how it was formed, and what is the vision for what it will end up becoming — is a big piece of what we delve into during initial due diligence.
I am an entrepreneur at heart and love starting and growing companies. I’ve been a part of growing and developing ten different companies as an operator and my love for this journey has evolved into helping other founders do the same thing; first as an angel investor and advisor, then leading syndicates with my partner, Craig, and now via our committed venture fund — Moonshots Capital. I wake up every morning fired up to meet new entrepreneurs and to help our existing portfolio founders succeed. The entrepreneurs can feel it, our team can feel it, and I can’t imagine ever not doing this.
That same type of excitement, that passion, is exactly what we look for in our founders.
Of course, not everything is going to go as planned and there will be serious challenges and setbacks. That is the nature of the start-up beast — and life. But what do you do about it? How do you handle the challenges? What’s your attitude every day?
Clear indicators that we are talking to a passionate founder:
- Contagious attitude.
- Demonstrated perseverance.
- Origin story describing the internal drive to build the company.
The founder’s passion better be infectious — if we don’t feel it from the founder (and CATCH it), we don’t invest. Be passionate.
Moonshots Capital is a military veteran-founded venture capital firm that invests in early-stage startups with extraordinary leaders.
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