When Passion isn't Enough: Evaluating Leaders of a Potential Investment

“PASSION LED US HERE”

Recently, we were asked by a venture capital firm to design a process for assessing the leaders of potential investments as part of their due diligence.

Start-ups often begin with passion - an idea, a drive, a determination to disrupt. But when it comes to evaluating the long-term potential of a business, passion isn’t enough. Strong, adaptable leadership is one of the clearest indicators of success.

Here’s how tools like the Leadership Circle 360 and a structured evaluation approach can make all the difference.

Step 1: Leadership 360 Assessment

Start with a structured leadership assessment. Tools such as the Leadership Circle 360 give a clear picture of the strengths and blind spots of founders, CEOs, and senior executives.

What to look for:

  • A proven track record of building and scaling businesses

  • Vision and dedication that is balanced with adaptability

  • External stakeholder feedback to give a fuller perspective

This kind of leadership 360 feedback goes beyond CVs or interviews. It shows how leaders are actually perceived in the real world and where development is needed.

Step 2: Adaptability and Learning Capacity

Markets change. Investors need leaders who can pivot, adapt, and learn from mistakes. Ask:

  • How have they responded to challenges in the past?

  • Can they balance resilience with flexibility?

  • Do they view setbacks as failure or as feedback?

Adaptability is often the difference between scaling and stalling.

Step 3: Leadership Style and Effectiveness

A strong leader sets the tone for the entire business. Focus on:

Communication Skills

How well do they articulate vision, strategy, and goals? Can they inspire confidence?

Team Building

Do they attract and develop talent, or is turnover a risk?

Conflict Resolution

How do they handle tough decisions and interpersonal challenges?

These questions go to the heart of effective leadership 360 insights - what people actually experience when they’re led.

Step 4: Cultural Fit

Strong partnerships require alignment. Assess whether the leaders’ values and style complement the culture of both the start-up and the VC firm. A mismatch here can undermine everything else.

Step 5: Alignment with Investor Vision

Leaders and investors need to share a vision for the company’s future. Where there’s misalignment, conflict is inevitable. Where there’s alignment, the partnership can thrive.

Step 6: Watch for Red Flags

Be alert to warning signs:

  • Lack of transparency

  • Ethical concerns or past legal issues

  • A pattern of repeated failures without evidence of learning

These can outweigh even the most charismatic pitch.

Beyond the Checklist

Data matters, but it never tells the full story. The real test of leadership is in qualities like vision, adaptability, authenticity, and how someone inspires the people around them.

That’s why tools like the Leadership Circle 360 are so powerful. They give structure to the process while leaving space for human judgement.

At Mojo Coaching and Leadership, we also design practical sessions, such as half-day workshops where investors and leadership teams collaborate on a live project. This gives invaluable insight into how a potential partnership might work in practice.

Get in Touch

If your firm is looking for a structured process to evaluate leaders, we can help. Contact us.



joanna McCarthy