3 Areas Investors Observe Grit in Entrepreneurs
All entrepreneurs will say they have grit and investors will say they are looking for it, but how do you tell?
The necessity of passion and perseverance
There has been a lot written on grit, an important characteristic for entrepreneurs. Angela Duckworth famously wrote a book on grit, highlighting both the necessity of passion and perseverance. All entrepreneurs will say they have grit and investors will say they are looking for it, but how do you tell?
One area to explore is understanding the entrepreneur’s story. What choices did they make with their time on what to pursue in their life? Why did they make those choices, what impact did they have, and does their passion continue in those areas? Most importantly, why is the entrepreneur passionate about their current idea and how does it link to their previous choices? Founder-idea fit is so important given the many challenges that lie ahead when starting a business.
Proven life experiences
To show grit, I like to understand past experiences the entrepreneurs have overcome that demonstrated grit. What happened, how did they handle it, what did they learn, and how did they respond? I always love the quote “Life is 10% what happens to you and 90% how you react to it.” Some examples of challenging experiences could be the death of a loved one, the failure to make a sports team/school, a previous startup that had to shut down, etc. The point is that the entrepreneur can show (not just talk) how they used grit to make it through difficult circumstances. Another way to test grit is speaking with someone who was involved in one of the difficult circumstances; what was their experience like and would they still recommend working with that person?
Observations over time
I am a big fan of lines, not dots to observe behaviors. I love meeting with entrepreneurs before they are raising money and talking through their current state and challenges. Then when we meet the next time, how have they worked through those challenges, and what new challenges exist. Repeat through several interactions, and over time you can see how they worked through several challenges and what their approach will likely be for the inevitable next challenge.
Running a startup is hard. What is your story on grit, and as an entrepreneur how do you communicate this to potential investors and team members to build the best team around you?