<aside> 💡 Key learnings
1️⃣ The lack of commercial expertise in a climate hardware startup’s team is the biggest shortcoming of climate hardware companies according to investor.
2️⃣ We identified 6 skills dimensions a hardware team should generally have: Science, Engineering, Finance, Entrepreneurship, Industry Experience, and Commercials/GTM. The importance of each skill depends of the business models.
3️⃣ Scientist CEOs should think about de-risking their team by adding commercial hires to the leadership team early on and setting up an A+ advisory board. And for the Scientist CSOs, they could look for The Generalist, The (Experienced) Entrepreneur and The Industry Veteran
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📝 Contents
Investors bet on people as much as ideas, even in the case of deep-tech startups. Theoretically, the assessment process for hardware and scientific founding teams is not fundamentally different from that of traditional VCs. This includes considering factors such as complementary team composition, founder-problem fit, a blend of humility and a go-getter attitude, etc..
However, the founders' backgrounds, team setups, and needed skill sets differ from other software businesses. In this chapter, we will not reiterate what VCs look for in an ideal founder in terms of personal traits, but instead, focus on the essential components for an ideal team. This includes team size, team composition, and finding complementary co-founders. We place a special emphasis on the role of Scientist CEOs (spoiler alert: not everyone needs a commercial co-founder).
Almost all components of a hardware startup are "heavier" than those of software companies, which could explain why hardware founding teams are often larger than software teams. The average team has 2.9 co-founders while around 80% of hardware founding teams who took part in our survey have 2 to 4 members (the industry average is 1.85).
What about founding solo? Just 6% of companies in our sample have been founded by solo founders and some VCs have sworn off investing in solo founders. Both Polina Vasilenko, the solo founder of HelioRec, which had the first trance of their seed round closed in 2023, and Johan du Plessis, Founder of tepeo, who just closed his Series A round of 10m £, both mentioned that being a solo founder has not been an obstacle in their fundraising journey. What they however have in common is that they start expanding their leadership team very quickly with the right hires as soon as the money hits the bank.
“After the first closing, I get on board as soon as possible my CTO and CFO, and we are looking to add a Sales Director in anticipation of the round closing” Polina Vasilenko, HelioRec
Building and managing hardware products is vastly more complicated than software products, hence the need for a variety of skills in a hardware founding team is more prominent. When it comes to climate-tech hardware solutions, each piece of responsibility is so vast that a perfect founding team should have each area of expertise covered (sooner or later).
We have broken it down into six domain expertise that belong to the skill matrix of a hardware founding team.
Does this mean that every hardware team would need 6 people? The obvious answer is no. The hierarchy of importance of the factors varies depending on the industry and business models. A founder could also cover multiple areas of expertise. However, a deep tech team should consider covering all these areas sooner or later, either by appointing advisors or building out their leadership team. We will examine these options more closely in the next chapter.