How to Identify Unicorn Startup Founders by Key Traits: A Guide for Investors

Investing in startups is a complex process, with the biggest challenge often being how to identify the next unicorn. While business models, market timing, and innovative ideas are all essential, the founder’s personality and skills play an equally significant role in determining the success of a company. Here, we explore 14 key traits that unicorn founders typically possess, and provide insights on how investors can evaluate these traits before making their decision.

Why It Matters: A founder’s management style shapes how they lead their team, make decisions, and delegate responsibilities. Founders who balance strong leadership with empowerment are more likely to foster innovation and productivity within their teams, key ingredients for growth.

How to Evaluate: Investors can evaluate a founder’s management style through reference checks with past colleagues and employees. Observing how they interact with their current team and respond to challenges during a pitch meeting can also give clues. Questions like, “How do you handle team disagreements?” or “What role do you take in daily operations?” can reveal their approach to management.

Why It Matters: Building a unicorn is fraught with high-stress situations, and a founder’s temperament can determine how well they handle pressure. Emotional stability and resilience are crucial traits for navigating the ups and downs of startup life.

How to Evaluate: Investors should look for evidence of how a founder has handled crises in the past. Asking about their biggest failures and how they recovered can provide insights into their emotional resilience. Additionally, observing the founder’s body language and communication style during intense discussions can indicate how they manage stress.

Why It Matters: A founder’s level of preparedness reflects their understanding of both the industry and their business’s operations. Unicorn founders usually have a deep knowledge of their market, competitors, and the operational challenges they face.

How to Evaluate: Investors can assess this by probing into the founder’s understanding of the market, competitors, and financial projections. A founder who is well-prepared will have detailed and thoughtful answers about every aspect of their business. Look for gaps in their knowledge or over-reliance on advisors, which could be red flags.

Why It Matters: Discipline is the backbone of consistent progress and long-term success. Unicorn founders maintain focus on their vision while executing the day-to-day tasks necessary to keep the company moving forward.

How to Evaluate: Investors can ask about the founder’s daily and weekly routines, how they prioritize tasks, and how they ensure key objectives are met. Additionally, reviewing their past execution and milestones achieved in previous startups or current ventures can indicate whether they maintain discipline over time.

Why It Matters: Traction is the evidence of a startup’s momentum. Unicorn founders are often laser-focused on acquiring customers, scaling growth, and generating revenue early on.

How to Evaluate: Traction can be assessed through business metrics such as user growth, revenue, or market penetration. Asking about key milestones the company has achieved and how these have been measured can give insights into the founder’s focus on growth. Investors can also verify traction by looking at historical financials, customer testimonials, and partnerships.

Why It Matters: Founders with previous business experience—especially those with past exits—are often better equipped to navigate the challenges of scaling a startup. This experience provides a broader understanding of business strategies and operational challenges.

How to Evaluate: Investors can dig into the founder’s past experience, particularly in leadership roles. Looking at previous companies they’ve founded, worked for, or exited from can provide a sense of their business acumen. Asking direct questions such as, “What were your key learnings from past ventures?” can offer deeper insights into their experience.

Why It Matters: In the volatile world of startups, being rigid in one’s approach can be detrimental. Founders of unicorn startups are known for their ability to adapt to market shifts, customer feedback, and unexpected challenges.

How to Evaluate: Flexibility can be assessed by asking founders about situations where they had to pivot or make significant changes to their business model. Investors can also analyze how a founder responds to feedback, particularly during pitch meetings, as this reflects their openness to new ideas and adaptability.

Why It Matters: A founder’s cultural background influences their worldview, business ethics, and approach to leadership. This background can also affect how well they understand and connect with different markets, especially in diverse or global environments.

How to Evaluate: Investors should understand the founder’s cultural perspective and how it aligns with the company’s market and team composition. Asking about their global experience or how they handle diversity within their team can reveal how their cultural background shapes their leadership style.

Why It Matters: Founders of unicorn startups often take calculated risks. Their willingness to experiment, invest heavily in new ideas, or enter new markets is what often propels their companies toward massive growth.

How to Evaluate: Investors can gauge risk tolerance by asking about the biggest risks the founder has taken, and how they approached mitigating potential downsides. Reviewing their past decisions—both successes and failures—can also reveal how comfortable they are with risk.

Why It Matters: A founder may be the face of the company, but team synergy is what turns a good idea into a billion-dollar business. Unicorn founders know how to build and lead high-performing, complementary teams that work well together.

How to Evaluate: Investors can assess team synergy by meeting key team members and evaluating the rapport between the founder and their team. Questions such as “How do you ensure your team is aligned with the company’s goals?” or “How do you resolve conflicts within your team?” can help investors understand the founder’s ability to foster strong team dynamics.

Why It Matters: Founders who understand the role of investors and have realistic expectations about funding and guidance are more likely to establish productive relationships with venture capitalists and angel groups.

How to Evaluate: Investors should ask founders about their expectations regarding capital investment, advisory roles, and long-term collaboration. Look for founders who seek more than just money but also value mentorship and strategic input from investors.

Why It Matters: A solid support system is essential for founders, especially during tough times. Having co-founders, advisors, or a strong board of directors helps founders navigate challenges more effectively.

How to Evaluate: Investors can ask about the founder’s support network, including co-founders, mentors, and board members. A well-supported founder is more likely to make sound decisions under pressure. Additionally, reviewing the qualifications and backgrounds of key people in the founder’s circle can provide insight into the level of support they receive.

Why It Matters: Successful unicorn founders are goal-oriented and set clear, achievable objectives for both the short and long term. Goal setting provides direction and helps founders measure their progress effectively.

How to Evaluate: Investors can ask about the founder’s short- and long-term goals for the company, as well as key performance indicators (KPIs) they use to track progress. Reviewing business plans and roadmaps can also reveal how strategic and realistic a founder’s goals are.

Why It Matters: Unicorn founders are often faced with market conditions or product developments that require them to pivot their business model. Being ready for such shifts while maintaining the core vision is a crucial trait.

How to Evaluate: Investors should inquire about any past pivots the company has undergone and how the founder approached them. Asking hypothetical questions such as, “What would you do if your primary revenue stream disappeared?” can test a founder’s readiness to pivot when necessary.

Investors aiming to find unicorn startups must look beyond the product and business model to the traits of the founder. By focusing on traits like management style, temperament, flexibility, and goal-setting, investors can better predict whether a founder has what it takes to lead a billion-dollar company. Evaluating these traits through in-depth conversations, reference checks, and historical performance will help investors make informed decisions, increasing their chances of backing the next unicorn.

By applying these insights, angel investor groups, venture capital firms, and business angels can better navigate the complex process of identifying opportunities to invest in promising founders. With the right evaluation framework in place, the next unicorn could be within reach.