What we look for in a founder
Every VC firm across the world is likely to share the same sentiment: you are not going to invest in a company unless you believe in the founder or founders. Of course, the wider management team is also critical to the success and scalability of a company, but the knowledge, expertise and conviction of the founders is the first and last thing that will be noticed.
That sprinkling of magic dust, that certain ‘je ne sais quoi’ is never the same in any two businesses. So, we have analysed three success stories out of our portfolio to see what features have defined their success. These are all examples of companies headed up by inspirational founders who have led the charge in taking their businesses from a seed of a thought to an international, profitable businesses.
Trinny London: Changing the face of make-up
Magic dust: Knowing the customer (and being the customer)
Trinny Woodall is a show-biz veteran and much-loved face on British television for the energy she radiates, her optimism and her friendly honesty. From a marketing perspective, having a celebrity founder might initially provide a flurry of interest in a new product, however this alone is not going to carry a brand through into the lofty domains of the larger make-up houses.
What made the difference in the success of Trinny’s story is the depth of Trinny’s conviction in the market opportunity of her make-up brand. She knew – and continues to know - her target audience intimately because she is the target audience.
During the original pitch, the word ‘if’ was not used when discussing hitting the $100 million turnover mark. It was always a definitive “WHEN we hit £100m”. Since founding the business she has been unwavering, and unflappable, in her mission. And this is what investors want to see. The company is well on its way to its predictions in that first meeting.
The initial story was compelling. In the early years when Trinny was on the road a lot working on her television shows, she would create her own make-up mixtures in little pots that she could throw into a small handbag and take everywhere with her. She would mix up a little bit of different make-up components to create exactly what she needed. In essence, this translated into fuss-free, easy-to-carry and easy-to-apply products, which is the benchmark of Trinny London’s products.
Capturing the consumer zeitgeist is hard and while there are plenty of companies trying to throw Artificial Intelligence at the challenge of predicting shifting consumer demands and desires, nothing truly beats human intuition. Trinny demonstrates this innate understanding and connection at every level of the product process with the most visible being how she interacts with consumers and followers of the brand on social media – the self-dubbed “Trinny Tribe”. She trials and tests the products before their eyes, discloses her daily routine and fully engages in their feedback – personally or via the brand’s wider team. This dedication to customer satisfaction is hard to replicate and is usually hard-wired.
If Trinny is the capital allocator who sets the direction of the business to maximise its potential, then COO, Mark McGuinness, is the capital generator making sure there is a steady and healthy flow of cash to support the roadmap Trinny has defined.
With a background as CFO of Badoo, one of the world’s biggest dating sites, and finance director of several media and gaming companies, Mark understood from the outset how important it is for a company to invest heavily in their own technology infrastructure, which is something that Trinny London continues to do. It’s an investment that continues to pay off and is reflected in the company’s best-in-class net promoter (NPS) score and customer retention metrics.
Here’s to hitting that £100 million target!
ADAY: Sustainable, slow fashion
Magic dust: Trust among co-founders
Most entrepreneurs say they always knew they wanted to be an entrepreneur. They may not know what the road map would be to get there and which market they would operate in, but they knew in their bones they were destined to change the world by building a company.
When you ask Meg He and Nina Faulhaber, co-founders of ADAY, at what point they knew they wanted to found a company, the first thing they tell you is they knew who they wanted to co-found a business with before they knew exactly what they wanted to do.
Trust among co-founders is one of the most important ingredients to start-up success, and there are plenty of stories that prove that co-founders falling out with each other is a crucial reason why startups fail. Investors often look for complimentary skill sets in the leadership team, but what we don’t talk about enough is the relationship between the co-founders, which is something that shone through with Nina and Meg: they trust each other implicitly. With the stress and pressures involved in the turbulent adventures of starting a new business, this is vital.
Nina and Meg launched ADAY almost eight years ago but their relationship dates back much further than that when they worked together at Goldman Sachs. The long hours and high pressure of their respective jobs made them both realise what you need to look for in a business partner: positivity, honesty, a strong work ethic and unshakeable optimism that create deep bond of trust.. They found all of these in each other and with the strength of this bond moving them forward they continue to build their vision of ADAY as a leading slow, sustainable fashion brand rooted in innovation.
Loyalty Lion: Loyalty programs for fast-growth merchants
Magic dust: Natural leadership
Since founding LoyaltyLion in 2012, CEO and co-founder Charlie Casey has developed his own distinctive style of authentic leadership supported by a great network of colleagues and advisers. He has always demonstrated natural leadership as he carried out his vision, instinctively commanding the respect of those around him.
Charlie’s actions demonstrate his clarity of purpose and sharp focus on the problem that he is striving to fix. He is building sustainably for the long term, taking care to invest wisely, keeping cost to a minimum, and choosing his team carefully to ensure a strong LoyaltyLion culture.
As a board observer, Mike Kennedy from Downing Ventures says, “I’ve seen Charlie demonstrate his drive to make LoyaltyLion a substantial business over time. He’s data focused and logical, competitive and curious and willing to invest in experiments to challenge convention. In summary, I’d describe Charlie as being a leader who has brought certainty and order to the highly volatile and uncertain start-up journey.”
Like many of the founders we work with, Charlie started his first business as a child – at age nine he was selling eggs on the side of the road. His entrepreneurial prowess grew from there and he secured the roles of Economics Adviser at the Foreign and Commonwealth Office and a Consultant at Deloitte. These roles led him to start his own business journey with LoyaltyLion, a company that provides customer engagement and loyalty software to over 4,000 fast growth e-commerce retailers in over 55 countries. The business has reached over 43 million end customers and has over 400 partners with integrations including Shopify, Magento and Bigcommerce.
Having just raised $12.5 million in a Series A funding round, the LoyaltyLion journey continues apace. With the new funding, LoyaltyLion plans to invest in growing its Development and Customer Success teams, and further evolve its loyalty and engagement platform. We look forward to seeing how Charlie and his team grow the business even further, and it’s safe to say that Charlie’s entrepreneurial spirit and natural leadership will stand him in good stead.
To read more about the Downing Ventures portfolio, visit www.downingventures.com
Capital is at risk and returns are not guaranteed.
21 Apr 2021