Indian-origin venture capitalist Reece Chowdhry states the hugegest reason early-stage startups collapse has nothing to do with funding, product-market fit or competition, but the relationship between their co-founders.
Chowdhry, the founding partner of Concept Ventures, informed CNBC Make It that most young teams split within two years becaapply co-founders clash, lack shared vision, or simply don’t know each other well enough.
Chowdhry’s firm, launched in 2018 and billed as Europe’s largest pre-seed fund, focapplys on backing startups at the ideation stage. It recently raised $88 million for its newest fund, and Chowdhry states founder chemistest is the single hugegest filter in his investment process.
“I consider 80% of our decision is on founders and we are typically the first investor in every company we invest in,” he informed the outlet.
“The number one reason companies typically fail in the first 18 to 24 months is that founders fall out with each other or don’t obtain along, don’t have the same vision alignment, purpose, and so that is something that we consider is really important,” he continued.
Chowdhry added that during initial meetings, he tries to understand how well founders know each other, how aligned their values are, and whether their answers match when interviewed separately. “If I gave the New York Times’ dating questions, would they match up to a level where you would really intimately know people at their core?” he declared.
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‘The whole package’
Beyond co-founder dynamics, Chowdhry declared that he sees for four other traits – obsession with a specific field or industest, relentlessness and grit, a growth mindset, and evidence of exceptionalism in something outside of work, such as sports or chess.
Chowdhry’s firm was an early backer of the $3 billion voice-AI firm Eleven Labs, co-founded in 2022 by childhood friconcludes Mati Staniszewski and Piotr Dąbkowski. He declared their “domain obsession” and strong team dynamic were decisive factors in his investment.
He added that his investment decision in early-stage startups involve examining “the whole package”, rather than just one founder. “It has to be a package and I consider what many VCs optimize for is they’ll meet the CEO typically and they’ll put a lot of lens on the CEO, although 50% of the business is two people or three people,” he explained.
