Entrepreneurs may not always realize it, but their behavior plays a role just as crucial as financial results and the business plan of their company. Certain behaviors can raise concerns among investors and drive them away, jeopardizing the chances of securing vital funding. Indeed, beyond the numbers, investors also scrutinize the human and managerial qualities of entrepreneurs. The behavior of entrepreneurs can provide investors with two insights: on the solidity and robustness of the company today and on the entrepreneur’s ability to develop and succeed tomorrow. And if investors neglect the human aspect, they regret it in the months following their investment by having bad surprises, because bad behaviors always precede bad results. This article explores the 12 behaviors that most concern investors, highlighting the practical implications and the impact they can have on the perception of the leader and his company.

1. Lack of self-awareness

A lack of self-awareness in an entrepreneur can be particularly worrying for investors. This can manifest as an overestimation of their abilities, an inability to recognize their own shortcomings, or a lack of receptivity to feedback. An entrepreneur who does not understand their own limits or the impact of their actions on others can make ill-advised decisions, harm the company’s culture, and hinder their ability to form an effective team. Investors look for leaders who have a clear understanding of their strengths and weaknesses, as this allows for the intelligent allocation of resources, especially in terms of recruiting talent to fill gaps.

2. Reluctance to share power and inability to delegate

The reluctance to share power and the inability to delegate reveal a tendency to centralize decisions and maintain strict control, which can limit a company’s agility and innovation capacity. This approach is detrimental to building a strong team and establishing a culture of trust and autonomy, essential elements for sustainable growth. Investors see these as signs of weak leadership, incapable of relying on the skills of a diverse team to face business challenges. Moreover, this suggests a potential bottleneck in decision-making, making the company vulnerable in the entrepreneur’s absence, not to mention the risk of overload and burnout for the leader.

3. Lack of transparency

Transparency is fundamental to building trust between entrepreneurs and investors. When entrepreneurs are not transparent, it can raise suspicions about the validity of the information provided, the real health of the company, or the presence of hidden problems. Investors may fear that the lack of transparency is a sign of undisclosed financial, legal, or operational risks, making the investment potentially dangerous. This can also indicate a propensity to avoid confrontation or not take responsibility for failures, which is detrimental to any business relationship.

4. Failure to meet commitments

Meeting commitments is a pillar of reliability and integrity in business. Entrepreneurs who fail to keep their promises demonstrate a lack of accountability and professionalism, undermining investors’ trust in their ability to complete projects or meet financial projections. This can also signal underlying project management or market understanding issues, increasing the risk perceived by investors. Failure to meet commitments can impact the company’s reputation, making it harder to secure future funding or partnerships.

5. Decision-making instability

An entrepreneur who frequently changes their mind or lacks consistency in their strategic vision can make it difficult for investors to understand and support the long-term goals of the company. This instability may indicate a lack of clarity, confidence, or market understanding, leading to impulsive or poorly informed decisions. For investors, this means the company may be poorly positioned to effectively respond to market challenges, and resources may be wasted by constantly changing direction. Such unpredictability can also discourage strategic partnerships and harm the internal culture of the company, creating an unstable work environment.

6. Ignoring advice

Entrepreneurs who systematically ignore advice or feedback, especially from experts or mentors, show a lack of openness and willingness to learn. This attitude can limit the company’s ability to adapt and innovate, as it refuses to consider external perspectives that could lead to significant improvements. For investors, this raises doubts about the entrepreneur’s ability to progress and grow, to navigate complex situations, or to adjust their strategy in response to market feedbacks. Such closure can also be perceived as arrogance, an unattractive trait for potential partners and customers.

7. Procrastination on significant changes

Postponing crucial decisions can indicate a risk aversion or an inability to act in the face of adversity. In a dynamic market environment, the ability to act quickly and decisively is often key to success. Investors may interpret procrastination as a sign of decision-making weakness, suggesting the company might miss important opportunities or not be able to pivot effectively when necessary. This can also reflect a company culture where indecision is common, hindering progress and innovation.

8. Authoritarian behavior

Authoritarian leadership can create a toxic work environment, harm team motivation, and limit the company’s ability to attract and retain talent. Investors look for companies led by individuals capable of building strong and committed teams, as this increases the chances of long-term success. Authoritarian behavior can also indicate an inability to accept feedback, which is crucial for continuous improvement. Such a leadership style is often associated with poor organizational performance and an inability to adapt to market changes.

9. Lack of focus

Entrepreneurs who lack focus and spread themselves too thin across multiple initiatives and projects risk diluting the company’s resources and attention. Investors prefer to invest in companies with a clear and focused strategy, as this increases the chances of success and return on investment. A lack of focus can also indicate a lack of strategic vision or a superficial understanding of the target market. In a competitive context, such an approach can lead to costly failures and an inability to position effectively.

10. Poor communication skills

Ineffective communication can harm all aspects of the business, from internal management to relationships with clients and investors. Entrepreneurs who do not clearly communicate their visions, strategies, or needs run the risk of misunderstandings and internal conflicts, which can destabilize the company and hinder its growth. Investors value communication skills because they are essential for negotiation, sales, and leadership. Poor communication can also impede the company’s ability to mobilize teams, attract additional investment, or establish vital strategic partnerships.

11. Lack of a solid team

Not having assembled a team with complementary and essential skills is a major red flag for investors. This may indicate that the entrepreneur lacks the ability or willingness to surround themselves with talent that could fill strategic and operational gaps. A weak or incomplete team suggests limited growth potential and a reduced capacity to execute a complex business strategy. Investors look for companies with strong teams capable of overcoming challenges and seizing opportunities effectively.

12. Lack of courage

Avoiding problems, challenges, or conflicts can reveal a lack of courage and the ability to face the harsh realities of entrepreneurship. Investors value resilience and determination, as the journey of a company is often fraught with obstacles and setbacks. An entrepreneur who dodges difficulties may not be prepared to make the tough decisions necessary to navigate through crises or to defend the interests of the company . This can compromise the long-term viability of the company and deter investors looking for leaders capable of effectively managing risks and uncertainties.

The assessment of entrepreneurs by investors goes far beyond numbers and business plan projections; it is deeply rooted in the analysis of behaviors and personal qualities. These elements are crucial indicators of a company’s ability to navigate through storms, realize its potential, and execute its strategy successfully.

Before embarking on any fundraising or sale process, whether partial or total, it is imperative for entrepreneurs to engage in deep introspection. Recognizing one’s strengths and weaknesses as a leader, and engaging in a process of personal development through accurate assessments and targeted coaching, can radically transform a company’s trajectory.

From the investors’ side, a keen understanding of the personality and management style of entrepreneurs is indispensable. Investing in a company is, above all, investing in its leaders. Conducting a thorough assessment not only allows for the detection of major assets that will be the catalysts for success but also helps identify risks and areas needing special attention after the investment.

To go further

For entrepreneurs: We support entrepreneurs and business leaders to enhance their performance, improve their behaviors and relationships, and maintain their energy. Discover our executive coaching program Leadership Boost

For investors: We support investors in their investment cycle by conducting leadership assessments and organizational audits of companies. Discover our services for HR Due Diligence