For most startup founders, capital is considered the one true way to growth. It would be great if funding were enough, as difficult as it can often be to secure, but it isn’t. Anyone who follows startups has seen any number of well-funded startups fail, not because they lacked cash or resources, but because they lacked the proper leadership. Having a vision and being adaptable are just as important as money. Without strong leadership skills, there’s a good chance your startup will eventually crumble.
The Leadership Gap in Early-Stage Startups
Most startups begin with either an amazing idea, strong technical know-how, insider knowledge of the market, or some combination of the three. But they’re often lacking in leadership experience. According to multiple studies on why startups fail, a lack of management and leadership skills ranks among the top causes, right alongside funding shortages.
It’s not easy for an early-stage company — there’s a lot of pressure, limited staff, a fragile or emerging culture, rapid pivots, and unexpected changes. No matter how brilliant the coder or savvy the product strategist, it’s for nought if they can’t inspire their team or successfully navigate a conflict. Without these skills, even the most promising startup is flirting with disaster.
Why Leadership Skills Matter
So why is leadership such an important part of managing a startup? There are a number of reasons, but a strong leader is able to:
- Attract and retain talent by inspiring trust and communicating a clear and compelling vision.
- Motivate employees to do their best through clarity, feedback, and recognition.
- Shape culture that supports innovation and builds resilience.
- Make smart and ethical decisions under pressure, using a combination of intuition and hard data.
- Build investor confidence by demonstrating more than just vision, showing rigorous operational discipline.
Effective Leadership for Founders
Startup leadership can be uniquely demanding. Beyond the traditional leadership challenges, there’s also product development, fundraising, and other hardships particular to startups. Founders have to establish themselves as leaders on top of these things, and it’s not easy! But it is crucial.
Key leadership qualities for startups include:
- Adaptability for the ability to pivot quickly when assumptions prove to be wrong or the market shifts.
- Communication skills for pitching ideas, aligning teams, and clearly managing expectations with integrity.
- Conflict resolution to address tension and disagreement head-on and prevent early teams from fracturing
- Emotional intelligence to understand and manage one’s own emotions, even in times of crisis, while also building trust with employees and stakeholders.
- Strategic thinking to see beyond the next funding round and position the business for ongoing, sustainable growth.
Startup leaders often have to build a new brand (sometimes against established competitors), manage remote-first teams, and scale operations faster than most traditional companies. Having technical product knowledge alone won’t help with those challenges. That’s why leadership is so important.
Why Leaders Should Prioritize Leadership Development
In essence, founders often have to learn leadership “on the fly.” While experience and intuition can count for a lot, that also means relying on trial and error, which can be costly when it comes to leadership challenges. That’s where formal leadership development comes into play. Structured development provides a more comprehensive foundation by providing real-world case studies, theoretical frameworks, peer learning opportunities, and constructive feedback from experienced mentors and faculty.
One time-honored option for those seeking leadership training is an online master’s in organizational leadership. If you’re already asking “what can you do with a master’s in organizational leadership,” the answer is: lots! The skills you acquire through this degree extend beyond startups, allowing you to transition into roles like HR leadership, consulting, or operations management.
But an online master’s in organizational leadership also has a lot to offer the startup founder — it’s flexible and comprehensive, and candidates can complete their studies online while still doing business.
Capacity Building to Attract Capital Growth
While it might be tempting to put seeking capital first, you may be surprised to learn that good leadership skills can also boost your funding prospects! Investors look for more than just a good idea or innovative product. They want a founder who can build a sustainable business.
Having strong leadership skills can help you strategically position your company for long-term success; more effectively negotiate with investors, partners, and suppliers; and forecast with more credibility using data-driven insights.
When investors see disciplined leadership combined with strong vision and big ideas, they’re that much more likely to commit funding.
Funding may buy you the time and resources you need to get started, but it’s leadership that will take you to the next level and sustain you through your company’s growing pains. By closing the so-called “leadership gap,” founders can unlock the full potential of their startup effort.
