How Funders Recognise a True Entrepreneur: The Good, the Bad and the Ugly

A compelling pitch can open a door. A promising invention can attract attention. Neither tells a funder everything they need to know about the person who must build the business.

Through my entrepreneurial experience and work with entrepreneurs at Maravion, I have come to place considerable importance on what happens beyond the presentation: how founders handle uncertainty, protect their knowledge, generate income, take responsibility and make room for other people.

These observations parallel the academic literature. Research gathered through Consensus suggests that investors value capable teams, preparation and openness to feedback. It also shows that investor judgement can be influenced by bias. Recognising entrepreneurial ability therefore requires scrutiny of both the founder and the assessor.

No single personality profile proves someone is a “true entrepreneur”. But behaviours are worth looking for, and misconceptions are worth challenging.

The good: commitment that survives the difficult journey

Entrepreneurship requires dedication to a cause, but that dedication must translate into action. A founder needs to keep solving problems when development takes longer than expected, customers hesitate, and the next funding round remains uncertain.

A survey of 885 venture capitalists at 681 firms found that respondents considered the management team more important than product or technology characteristics when selecting investments. They also attributed more of a venture’s ultimate success or failure to the team than to the business characteristics. These are investors’ reported beliefs, rather than proof that their assessments always predict success. Nevertheless, they underline the importance placed on the people responsible for execution. [1]

In my experience, commitment becomes visible in the work founders do between funding opportunities. Do they follow through? Do they investigate customer needs? Do they understand the next obstacle and take practical steps to address it?

This differs from simply pursuing whichever funding programme is available.

Adaptability is valuable, but a venture cannot keep changing its purpose to fit the next application form. Funding should support a credible commercial direction.

Preparation matters too. A study of 72 angel investors evaluating 133 live pitches found that preparation positively influenced their assessments. Enthusiasm, preparation and commitment were distinct signals. [2]

Passion may earn attention; understanding the business gives that attention something substantial to rest on.

Protect the secret, but explain the opportunity

One difficulty I encounter is excessive concern about confidentiality. Protecting proprietary knowledge is sensible. Making meaningful assessment impossible is a different matter.

A founder who treats every aspect of the venture as secret leaves a funder with little basis to decide. The customer problem, commercial proposition, development status, supporting evidence and funding requirement must be explainable. Technical details can then be disclosed selectively, under suitable protections where necessary.

The practical problem arises when confidentiality demands prevent advisers or funders from discussing, evaluating or reporting on the opportunity. Whatever the intention, restrictions that make assessment unworkable can obstruct funding.

An indefinite confidentiality obligation alone does not make a venture unfundable. My concern is the cumulative effect of the demands: whether they leave enough room for the work needed to assess and support the company.

A capable entrepreneur should understand what gives the business its advantage, what must remain protected and what evidence can be shared. Refusing every meaningful disclosure does not strengthen the investment case. It prevents anyone from examining it.

Cash must be part of the strategy

Deep-tech businesses can spend years developing products before generating substantial revenue. Even after the first sale, market development and expansion can create further pressure on cash.

Maravion’s three-valley framework distinguishes the move from research to first commercialisation, the development of repeatable sales and market access, and the transition to sustainable growth. This is a practical framework for planning successive challenges, rather than a universal classification. [9]

Founders therefore need to think beyond the next grant. What will sustain the venture while development continues? What will fund inventory, customer acquisition or the delay between delivering a product and being paid?

Sometimes the answer lies in the entrepreneur’s existing capabilities. Consulting, technical services, distribution or complementary products may generate income while the proprietary product is being developed. For example, importing and selling an appropriately sourced product under an agreed brand arrangement could help build customer relationships and reveal buying behaviour. It would not automatically validate the founder’s own future product, but it could provide useful commercial learning.

Such activities need discipline. An additional revenue stream that consumes more cash and attention than it provides can become a distraction. The test is whether it helps sustain the core venture.

I do not believe commitment should be measured by how much personal debt someone accepts. Friends and family can provide support, but repeatedly borrowing from them is not a substitute for a viable funding strategy. Limited personal wealth also does not imply limited entrepreneurial ability.

Cash shortages are common. The revealing question is whether the founder understands them, plans for them and acts early enough to preserve options.

A technical founder still has responsibility for the business

“I am the technical person” cannot be an excuse for ignoring finance, sales, tax, fundraising, or operations.

In a young company, founders often have to work across functions because they don't have the money or the team to do otherwise. They need to understand how technical decisions affect costs, how pricing affects margins and how customer payment terms affect survival.

That does not mean doing every task personally. Professional accounting, legal and regulatory support may be necessary from an early stage. But bringing in a specialist should improve the founder’s decisions, rather than leave the founder unaware of what is happening.

The responsibility remains with the entrepreneur. Outsourcing bookkeeping does not remove the need to understand cash flow. Hiring a sales adviser does not remove the need to understand customers.

Maravion’s work connects technical and commercial assessment with financial modelling, funding preparation and commercialisation planning. [10] These activities belong together because a technically successful product still needs a business capable of producing and selling it sustainably.

The bad: when confidence becomes resistance

Confidence and independence help entrepreneurs persevere. Taken too far, they can make a company difficult to advise, govern or grow.

Danny Miller’s conceptual paper explores how entrepreneurial strengths can develop into damaging behaviours, including aggression, narcissism and irresponsibility. It argues for closer study, rather than as a diagnostic tool for judging individual founders. [4]

In practice, I would look at behaviour: Does the founder acknowledge mistakes? Can colleagues challenge a decision? Are commercial concerns taken seriously? Does the founder change course when evidence undermines an assumption?

Research involving 84 European investors found that perceived competence mattered more than cooperativeness, and that competence became more appealing when combined with openness to coaching. [3]

Being willing to learn does not mean agreeing with every investor. It means considering advice seriously and explaining decisions with evidence.

Persistence is useful when it drives further testing and problem-solving. It becomes dangerous when it protects the founder’s preferred answer from scrutiny.

Let the company grow beyond its founder

A founder may be essential to the company’s beginnings without being the right person to lead every later stage.

One damaging pattern is believing the company is nothing without its creator. It can lead to resistance to delegation, excluding experienced colleagues, and an unwillingness to share authority.

For some scientific founders, moving into a chief scientific officer or technical leadership role allows their expertise to remain central while an experienced CEO takes responsibility for the wider business. Others can develop into effective CEOs themselves. The decision should follow the company’s needs and the founder’s capabilities.

The ability to make this transition can demonstrate commitment to the venture’s purpose. A founder who wants the company to succeed must eventually let others make consequential contributions and decisions.

The ugly: funders can mistake familiarity for ability

Funders also need to question how they recognise entrepreneurial potential.

Research has identified a tendency for venture capitalists to favour teams with training and professional experience similar to their own. [6] Another study found that men were more often asked about growth and gains, while women were more often asked about preventing losses, and these patterns were associated with different funding outcomes. [5]

These findings challenge the assumption that every judgement about a founder reflects an objective assessment of ability.

Age is another poor shortcut. A review and meta-analysis of 102 samples found a weak positive association between age and overall entrepreneurial success, although results varied across measures of success. [7] The youthful founder stereotype should not cause investors to overlook accumulated industry knowledge and experience.

Nor do all funders seek the same thing. A systematic review of 153 papers found substantial differences in decision criteria across equity investors. [8] Much of the research discussed here concerns venture capital and angel investment; banks, grant programmes and development finance institutions have additional objectives and constraints.

Rejection may reflect a weak proposition, but it may also reflect a mismatch with the funder’s mandate, preferred stage or investment model. Receiving funding is not a certificate of entrepreneurial ability, and being rejected is not proof of its absence.

What should funders look for?

My view is that assessment should move beyond the pitch and examine behaviour over time. Look for founders who understand their customers, can explain their evidence, know their cash requirements and follow through on commitments.

Look for proportionate protection of confidential information, responsibility across business functions and a willingness to bring in people with complementary skills.

The warning signs are equally practical: claims that cannot be examined, repeated promises without delivery, financial ignorance, resistance to evidence and a company organised around protecting the founder’s authority.

At Maravion, commercialisation support helps turn inventions into viable businesses. That requires more than impressive science or a polished funding proposal. It requires people who can keep learning, sustain the venture and build an organisation capable of carrying the idea further than they could alone.

References

1. Gompers, P. A., Gornall, W., Kaplan, S. and Strebulaev, I. A. (2020). [How do venture capitalists make decisions?](https://consensus.app/papers/how-do-venture-capitalists-make-decisions-gompers-gornall/1ea3a1853a045d77a871ca1ad4480f29/?utm_source=chatgpt) Journal of Financial Economics. 660 citations. Consensus supplies the working-paper DOI: 10.2139/ssrn.2801385.

2. Cardon, M. S., Mitteness, C. and Sudek, R. (2017). [Motivational Cues and Angel Investing: Interactions among Enthusiasm, Preparedness, and Commitment](https://consensus.app/papers/motivational-cues-and-angel-investing-interactions-among-cardon-mitteness/ab09b9d23f5350f9b45a7d6c59e2c940/?utm_source=chatgpt) Entrepreneurship Theory and Practice. 114 citations. DOI: 10.1111/etap.12255.

3. Svetek, M. (2022). [The Role of Entrepreneurs’ Perceived Competence and Cooperativeness in Early-Stage Financing](https://consensus.app/papers/the-role-of-entrepreneurs’-perceived-competence-and-svetek/cbc97acd56e25345981ce8bfaa572b90/?utm_source=chatgpt) Entrepreneurship Theory and Practice. 28 citations. DOI: 10.1177/10422587221127000.

4. Miller, D. (2015). [A Downside to the Entrepreneurial Personality?](https://consensus.app/papers/a-downside-to-the-entrepreneurial-personality-miller/402ca6374391561b9bd635f4c85c5df7/?utm_source=chatgpt) Entrepreneurship Theory and Practice. 253 citations. DOI: 10.1111/etap.12130.

5. Kanze, D., Huang, L., Conley, M. A. and Higgins, E. (2017). [We Ask Men to Win and Women Not to Lose: Closing the Gender Gap in Startup Funding](https://consensus.app/papers/we-ask-men-to-win-and-women-not-to-lose-closing-the-gender-gap-kanze-huang/1fbac0eb45df5beeb4e0e3864fc49aea/?utm_source=chatgpt) Academy of Management Journal. 558 citations. DOI: 10.5465/amj.2016.1215.

6. Franke, N., Gruber, M., Harhoff, D. and Henkel, J. (2006). [What you are is what you like: similarity biases in venture capitalists’ evaluations of start-up teams](https://consensus.app/papers/what-you-are-is-what-you-like—similarity-biases-in-venture-franke-gruber/a6c2cfc4cc495d9182dd6b1211b62f29/?utm_source=chatgpt) Journal of Business Venturing. 404 citations. DOI: 10.1016/j.jbusvent.2005.07.001.

7. Zhao, H., O’Connor, G., Wu, J. and Lumpkin, G. (2020). [Age and entrepreneurial career success: A review and a meta-analysis](https://consensus.app/papers/age-and-entrepreneurial-career-success-a-review-and-a-zhao-oconnor/2c92edf1eb69534696860bd6a2401834/?utm_source=chatgpt) Journal of Business Venturing. 217 citations. DOI: 10.1016/j.jbusvent.2020.106007.

8. Berliner, D., Shneor, R. and Wald, A. (2025). [What influences equity investors’ decision-making in entrepreneurial finance: a systematic literature review 1983–2022](https://consensus.app/papers/what-influences-equity-investors’-decisionmaking-in-berliner-shneor/a566302015f854a19abf4634ff6be8bc/?utm_source=chatgpt) Venture Capital. 5 citations. DOI: 10.1080/13691066.2025.2496743.

9. Maravion. [Deep Tech Does Not Face One Valley of Death. It Faces Three](https://www.maravion.com/post/deep-tech-does-not-face-one-valley-of-death-it-faces-three).

10. Maravion. [Business and commercialisation services](https://www.maravion.com/).