When you bring a new founder into your portfolio, their initial success is going to be dictated by their ability to deliver sales. We know that not all founders are natural salespeople. But how do you assess a founder’s ability to sell?
Sales ability is in the sales data
It’s all about the data. VCs will have the information they need in the data room but knowing what information to evaluate is key. You need to quickly determine:
- Is the founder good at creating top of funnel activities?
- Are they strong at prospecting?
- Once they get opportunities in the pipeline, do they get stuck?
- How’s conversion rate from discovery to demo?
Analysing the data will give you a strong indicator as to where your founder needs most help. Most founders I work with need support with the top of their funnel.
Fixing the right problems
There are three key metrics to evaluate a founder’s sales ability:
- Number of opportunities created per month (pipeline),
- Speed of moving opportunities through the sales pipeline (pipeline velocity)
- Conversion rate at each stage from initial meeting to closed deal
I work with a lot of founders to create go to market strategies and these metrics indicate how skilled someone is at selling. In addition, you need to add whether your founder can generate opportunities from cold outreach?
I recently spoke with a founder who had a 50% drop off after the discovery stage, and then another 50% drop off between the next stage. So while this founder was strong at the top of the funnel, they struggled at later stages of the process. In this case, the founder didn’t need more opportunities, just to improve at progressing opportunities once opened.
You can’t fix the problem, until you know what the problem is.
Utilise your networking to provide specialist support
Most VCs now have portfolio partners that can provide additional expertise to their founders. Utilising your network gives founders an additional support network, helps solve specific challenges, and adds an extra layer of value to your portfolio.
Three things VC should challenge founders on
Creating pipeline
How effective are they at gaining interest from someone that hasn’t knocked on the door or has never heard of the company? Creating interest from outside the immediate network is crucial to creating a pipeline.
Client discovery
Asking great questions and being naturally curious are key to discovery and throughout the sales process. It’s also really important for product roadmap development – so it’s bigger than just the immediately active pipeline.
Owning data
The VCs I work with love it when founders know their numbers inside out. Technical founders tend to be very good at knowing their data because they’ve set up workflows, Excel docs, and dashboards as they grow their product.
Beyond data – what VCs look for in founders
There’s definitely no setup makeup of what makes a successful founder. It takes all sorts.
But in my opinion, the best founders are ones that know how to pivot.
We did some work with a seed stage company last year that raised 4.2 million USD, and six months later, the founder made a decision to pivot.
He had 35 people at the time but made a decision to make 15 of them redundant and completely pivot the product because he could see that there wasn’t as big a market as initially expected and the business model was a little bit flawed.
So instead of continuing to burn through cash and killing the company, he made a decisioin that many founders struggle to make. That’s quite a bold move, and I think that’s what makes really strong founders.
Whatever type of founder you work with, get to grips with the data and provide specialist support in the areas they need it most.
Author: Matthew Codd
I’m Matthew, I have 15 years of commercial leadership experience, helping VC-backed B2B technology companies scale revenue and transition from founder-led sales.
I use my experience to help early-stage start-ups with GTM expertise, sales best practice, and hiring insights.
I co-founded Cosmic Partners in 2022. We are SaaS sales recruitment specialists for VC backed B2B tech companies.
