Traits of unicorn founders — how to spot them at an early stage?
By: Johan Brenner
Tags: Startup, Founders, Unicorns, Venture Capital, Resources

At Creandum, in the past 18 years, we have been fortunate to have worked with some of Europe’s most successful startup founders, such as Daniel Ek from Spotify, Sebastian Siemieatkoswski from Klarna, Johannes Schildt from Kry, Jacob de Geer and Magnus Nilsson from iZettle, Emil Eifremfrom Neo4J, Christian Hecker from Trade Republic and many more. After a while, we realized that these incredible entrepreneurs all share some fundamental characteristics. Of course, they all have lots of energy, work hard, show patience, perseverance and resilience. But on top of that, all these unicorn founders share five key traits that, as an investor, you should look for when you back them at an early stage.

1. They know what they don’t know

Many people expect a typical startup founder to be very confident and have a strong sales mentality. While they should definitely live up to those expectations, the best founders are also humble and well aware of their weaknesses and limitations as well as the potential challenges for their startup. They keep wanting to learn, improve, and grow the business beyond what average people have the energy and drive to manage.

How do you spot that at an early stage?

They listen and reflect on key questions. They don’t always go for the fastest answer.

They are building a strong team around them and have shown that by making a couple of key hires.

They understand where the gaps are and which talents and skills will complement their own strengths.

They show a constant curiosity in and outside their domain.

“I’ve always been a really, really insatiable, curious person.” Daniel Ek, Spotify Founder & CEO.

‘Knowing what you don’t know’ is key when it comes to building the right team. When we met the Spotify founders Daniel Ek and Martin Lorentzon in 2006, we were struck by how they challenged, complemented and respected each other. Their level of discussion and how much they pushed each other is something we’re always looking for in co-founders. (For more insights on Daniel Ek’s journey from founder to CEO, listen to the 20min VC podcast)

As investors, we are well aware that, in reality, we have limited influence on the success of a startup. But if the founders have an ounce of this character trait, it’s also likely that they will listen to at least some key advice at pivotal moments towards building a unicorn.

2. Helicopter ability

The most successful founders think BIG. However, the best ones also sweat the small stuff, and show frugality, particularly in the early days when they’re operating with a tiny budget and an often nonexistent team. Founders need to be hustlers/ hard-working individuals.

Much more difficult to spot, though, is their leadership potential. In other words, the ability to move between strategic, high-level thinking and operational problem solving on a day-to-day basis, and then evolve this seamlessly as the business grows. In a matter of a few years, a unicorn founder has to shift from being the hands-on jack-of-all-trades, to the hiring manager and then the CEO, all the while leading the company. Essentially showing “helicopter” ability — moving from strategy to operations and back– seamlessly in the interactions.

How to spot these traits early:

There is clarity about the founder’s long-term plan and vision for the company. Early actions are aligned with a North star.

There are signs the founders are walking the talk as you see them interact with their team members. Good leaders demonstrate great communication skills, as well as clarity, transparency and integrity.

There are proof points of an eager mentality in the previous experiences of the founders.

Sebastian, Siemieatkowski, co-founder and CEO Klarna.

A great example is Sebastian from Klarna, who 16 years ago embarked on a journey to build today’s highest-valued European fintech ever. An immigrant in Sweden, he took on side projects from an early age and started Klarna when he was 23. He has since scaled the company to 3,500 employees. Throughout, Sebastian has kept agile, kept learning, and evolved as a people’s empowerer. To learn more about his leadership journey, listen to the 20-min VC podcast.

A true unicorn founder doesn’t need to have all of those capabilities on day one, nevertheless, they should already be thinking big while executing small, and demonstrating that they understand how to scale a company.

3. Put people first

Strong people skills are crucial but hard to notice in early-stage founders. But you can check if they know how to trust, evaluate, and inspire those around them, whether that’s investors, employees, clients or partners. Another positive sign is if they are building a unique company culture and a uniting narrative very early on. Culture is a natural precursor to attracting, hiring and retaining exceptional talent within an environment that rewards its people for hard work.

What to watch out for even when the company only consists of 2–5 people:

Founders can talk about culture and what this looks like in their company

Signs of early great additions to the team.

Founders understand the importance of growing and benchmarking talent

Jacob de Geer and Magnus Nilsson, co-founders of iZettle, which was acquired by Paypal in 2018 for $2.2B. Photo by Johan Knobe.

Take iZettle for example. They grew the company to 900+ employees and were acquired by PayPal in 2018. Scaling a company that fast requires a culture that attracts and retains exceptional talent within the kind of environment described above. Jacob and Magnus have done a phenomenal job at this.

The best founders never stop thinking about their people, always challenge the status quo, and make brave decisions regarding when to hire and when to let go of certain people — and when letting go, being generous.

4. Passion vs. industry knowledge

While a founder of a deep tech company or B2B software is likely to have very specific sector knowledge, this doesn’t necessarily hold true when it comes to building unicorns in general. Over the years, we realized that what’s more important than industry knowledge is a real passion, as it is often the key motivator driving the team through the many ups and inevitable downs. In fact, some industries are best disrupted with no or limited knowledge of the industry and rather a “naive” optimistic view of how it could be done better. There’s something about SIMPLIFYING a product or industry that sometimes is easier from someone from the outside as we saw in the invention of Kry (‘there should be no waiting lines for healthcare’) or Vivino (‘scan the bottle and then get it delivered to your doorstep).

“I think a simplified mindset and a completely new approach is the best way to disrupt an industry.” Heini Zachariassen, Vivino Founder & CEO.

For instance, despite being an avid wine drinker, Vivino founder Heini Zachariassen didn’t have any professional experience in the industry. Instead, he approached the topic from a user angle, and what motivated him to start Vivino was the need to solve his own problem of not knowing which wine to buy.

5. Great at fundraising

The easiest and one of the most important traits to recognize as an investor is the founder’s ability to ace the fundraising process, a crucial component of which is the ability to think strategically, inspire, influence, and persuade. Consequently, if you see a founder performing very well in the fundraising process, this is a great early sign of success. You are then backing a team that not only can sell to investors but also to partners, new hires, customers and others.

What to look for:

The founders are comfortable pitching to investors, even when they don’t need to fundraise.

They have a knack for explaining the problem, solution and opportunity in simple, compelling terms. This skill is also essential for recruiting and winning customers and business partners.

They know how to build competitive momentum and create VC FOMO to maximize rounds and attract the best VC brands.

Trade Republic co-founders Marco Cancellieri, Thomas Pischke and Christian Hecker. Photo by Dominic Tryba.

Trade Republic’s co-founder Christian Hecker developed his company in stealth mode over four years before he reached out to get the first investors on board. Less than a year after we led their Series A round in 2019, Hecker closed one of Germany’s largest Series C rounds ever at $900M, bringing the company valuation to over $5B.

So next time when you are a frustrated investor fighting to get to invest in a competitive round, well-orchestrated by the founders, remember that next time you are on the same side of the table — as partners. It may be the best signal to pay up and invest.