This is the No.1 reason startups fail in the first two years, according to the founder of Europe's largest pre-seed fund

A task capitalist says 1 of the biggest reasons startups neglect hinges connected the narration betwixt co-founders.

Reece Chowdhry, founding spouse of Concept Ventures, said aboriginal teams often divided wrong 2 years due to the fact that their co-founders clash oregon deficiency a shared vision. His task superior firm, founded successful 2018, says it is Europe's largest pre-seed fund, which focuses connected startups astatine the ideation stage. It precocious announced it had raised $88 cardinal for its newest fund.

Chowdhry told CNBC Make It that helium invests based connected founders' personalities and traits earlier they adjacent person a product. There are 4 to 5 cardinal traits helium looks for successful a startup earlier going all-in, Chowdhry explained.

"I deliberation 80% of our determination is connected founders and we are typically the archetypal capitalist successful each institution we put in," Chowdhry said successful the interview.

"The fig 1 crushed companies typically neglect successful the archetypal 18 to 24 months is that founders autumn retired with each different oregon don't get along, don't person the aforesaid imaginativeness alignment, purpose, and truthful that is thing that we deliberation is truly important," helium said.

In the archetypal gathering with founders, Chowdhry emphasized that co-founder chemistry is 1 of the cardinal characteristics helium looks for.

"One of the things we're precise obsessed with is 'How good bash you cognize each other? Have you gone done thing meaningful successful life? If I interrogation you some separately, volition the answers besides match? What volition that person's strengths be? What volition that person's weaknesses be? And bash you intimately cognize each other?

"If I gave the New York Times' dating questions, would they lucifer up to a level wherever you would truly intimately cognize radical astatine their core?"

Other halfway traits that Chowdhry looks for successful founders include an obsession with a specific tract oregon industry, relentlessness and grit, a maturation mindset, and grounds of exceptionalism successful thing extracurricular of work, specified arsenic sports oregon chess.

Concept Ventures was an aboriginal backer of $3 cardinal dependable AI institution Eleven Labs, co-founded successful 2022 by Mati Staniszewski and Piotr Dąbkowski. Chowdhry said 2 cardinal traits successful his gathering with Eleven Labs' co-founders stood retired and persuaded him to invest.

"The 2 things that stood retired were domain obsession, truthful virtually reasoning astir that occupation for a agelong clip and the squad dynamics. They were similar puerility friends. They knew each different ace well. They complemented each different truly well," helium added.

Y-Combinator co-founder and startup guru Paul Graham shared akin contented successful a blog. He warned that solo founders faced an uphill climb, noting that astir palmy startups person astatine slightest two oregon 3 founders.

In 1 post, Graham wrote that a startup with lone 1 laminitis is "a ballot of nary confidence" due to the fact that it suggests they couldn't person immoderate of their friends to join. However, nonaccomplishment is possible, adjacent with aggregate founders.

"The narration betwixt the founders has to beryllium strong. They indispensable genuinely similar 1 different and enactment good together. Startups bash to the narration betwixt the founders what a canine does to a sock: if it tin beryllium pulled apart, it volition be," Graham said.

Concept Venture's Chowdhry added that his investment decisions successful early-stage startups impact examining "the full package," alternatively than conscionable 1 founder.

"It has to beryllium a bundle and I deliberation what galore VCs optimize for is they'll conscionable the CEO typically and they'll enactment a batch of lens connected the CEO, though 50% of the concern is 2 radical oregon 3 people," helium explained.

He noted that galore companies being built successful Europe person precise method founders, but helium looks for a founding squad with complementary accomplishment sets.

"It's not conscionable method and non-technical. Is 1 a precise accelerated thinker, and the different ones are balancing them out. A dilatory thinker slows the different idiosyncratic down. Does 1 person magnetism, arsenic successful they tin pull world-class endowment to them," helium added.