Minimum Fundable Team: how early team shapes seed fundraising
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My role at Pear is to directly support pre-seed founders that participate in PearX with their hiring needs. PearX is our hands-on, 14-week bootcamp designed to position founders to raise seed rounds from top tier investors. We’re experts at helping companies raise this capital; over 90% of PearX companies go on to raise capital from top investors.
We have found, that at early stage, the four largest themes driving an investor’s decision to invest in a company are:
- Market
- Product
- Traction
- Team
To successfully raise capital, you need all four to be great OR one or two to be exceptional.
However, at pre-seed in particular, markets are difficult to size and product or traction are often still too early to measure with a high degree of conviction. For these reasons, investors will often place an outsized emphasis on the quality and completeness of the team when making an investment decision.
At Pear, we refer to the completeness of a team at this stage as Minimum Fundable Team or MFT.
Prior to raising a pre-seed or seed round, founders should ensure their MFT is a competitive advantage. We suggest that all founders ask the following three simple questions to determine the completeness of their team prior to raising:
1. Is someone on the team a deep subject matter expert with the market or product you’re building?
2. Has someone on the team built a successful product from zero?
3. Do you have the right mix of skills across the team required to ship a quality product quickly?
If the answer to any of the questions above is no, what steps need to be taken to fill in any gaps to achieve MFT?
We believe that hiring is one of the best ways to do this quickly.
One of the advantages of joining PearX is that helping founders achieve MFT is a core part of our offering. Over the last 12 months, I have worked with 30 different teams and helped fill over 25 roles. Each of these hires have played a critical role in helping those teams reach MFT and close a successful round of funding.
If you take away one learning from this article, it’s that hiring plays one of the most critical roles in early stage fundraising. Founders who achieve MFT prior to fundraising will have a higher likelihood of success compared to those who don’t.