A successful founder should have a previous experience in the sector?

July 5, 2018

As every VC investor, the quality of the Team is a key factor in my investment decision.

 

Particularly, I think that a strong knowledge of the sector by the founder is a key factor in the success of a new venture.

 

I usually looking for founders that have already worked in the industry or that through family connection/previous experience have a strong knowledge of the sector.

 

An analysis of the founder’s background of the top 20 UK tech companies partly refutes this thesis.

 

Of the 20 companies analysed, just 11 of them (or 55%) have been founded by an entrepreneur with a previous experience in the sector.

 

 

 

In fact, while some companies have founders with strong knowledge of the sector (for example in Purple Bricks the founder previously owned a real estate agency or Net a Porter where the founder was a fashion editor) in others the entrepreneur has zero previous experience in the sector (for example the founder of Deliveroo was a banker or the founder of Skyscanner was an IT developer for M&S).

 

There is not a clear correlation between the success of a start up and the previous experience in the sector of the founder/s.

 

However, a path emerges in the analysis of the 9 top tech companies founded by people with no previous knowledge of the sector.

 

77% of those companies have been founded by previous bankers, strategy consultants or students.

 

In summary: try to invest in a founder with a previous experience in the industry, if not back a banker!

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