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What do investors really look for in a founding team?

In our Q&A with David Hehman of Underdog Labs, he shares the traits he looks for in founding teams.

While Memorial Day weekend seemed to affect founders (links sent was down over 14%, it seems VCs spent their downtime reading decks. Overall pitch deck interest was up another 2.6%, which puts it up 30% YoY. But what characteristics are investors looking for in founding teams? We caught up with David Hehman of Underdog Labs to learn which traits founding teams have that lead him to make an investment.

The Active VC List keeps growing

The list updates live with additions from our fundraising community. Since last week, there have been 11 new firms added to the list, for a total of 309, including Vertex Ventures, Founder Factory, and Rucker Park Capital.

Q&A with David Hehman: Co-Founder of Underdog Labs

David Hehman co-founded Underdog Labs, a boutique startup studio, in early 2019 to help early-stage entrepreneurs create and scale successful companies. He is also a Co-Founder and Board Member of FlexJobs. Here’s what he looks for in founding teams, including his recent investment, and a trend he sees in pitch decks.

With your recent investment in, what about their team led you to make an investment in their pre-seed round?

We were initially (and continue to be) very impressed with several things about the founders, Adam and John, that really provided the linchpins for our investment. First, they had identified a real need that they understood very well in terms of helping College Students without work experience establish a foothold in their careers. Second, they had iterated aggressively to find the exact solution that really solved that need while also creating an amazing resource for employers to source great talent. Finally, this is a team that had accomplished a lot with very little capital. All key attributes for success in our opinion.

The investments you make are primarily pre-seed and seed stage. How do you think about the founding team when evaluating a pitch deck and what makes a team stand out to you?

First, we’re looking for the X factor in founders. Are they truly passionate about what they are doing? Or is this just a way to try to generate wealth. Will they find creative ways to break through walls and overcome all of the unforeseen obstacles? Then, we want to understand the founder team dynamics – do they complement each other’s skillsets such that the team is stronger than the sum of its parts? Do they have strong chemistry and relationships that will help them survive the downs? Finally, do they bring something specific to the table (industry knowledge, technical ability, some type of unique growth insight) that gives them an outsized chance of success?

Underdog Labs is on our Active VC List. How has your investment process and strategy evolved during this quarter?

We are actively making investments now. We know from experience that great companies are born and made in trying times. The companies that can generate traction despite economic climate headwinds are the ones we want to bet on.

What trends are you seeing in early-stage pitch decks?

Thankfully shorter and more to the point. Less context setting, more specifics on differentiation, product, and team.

Is there anything else you want to share or add?

We’re so thankful for your including us in this newsletter! What makes Underdog Labs special is our love of working with very, very early-stage founders. We thrive on helping our companies make sense of the early stage chaos.

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