Founder Evaluation from VCs’ Perspective: Emphasizing Grit and Moderate Optimism and Gauging Them Scientifically

The element “people” has become increasingly essential among the criteria VCs evaluate before making an investment decision. Nevertheless, aside from the readily available information such as educational background and prior entrepreneurial or professional experience, some characteristics of founders are challenging to observe in the short term but can be equally or even more critical to the success of ventures. Through a review of the relevant literature, this paper highlights grit and moderate optimism as crucial qualities for VCs to consider when evaluating founders and examines evidence that these traits make founders more likely to succeed in their ventures. Additionally, it seeks to advise novice or less experienced VCs to employ scientifically validated approaches to gain insight into the attributes of founders that are not readily observable before making a funding decision. Instruments such as the Short Grit (Grit-S) Scale constructed by Duckworth and Quinn and the Revised Life Orientation Test (LOT-R) developed by Scheier et al. to gauge founders’ level of grittiness and optimism are suggested to be incorporated into the founder evaluation process.