Startup founders lack confidence in their own abilities, finds study

The vast majority of founders pinpointed their own ability to evolve from a founder to a CEO as the biggest risk to their company’s growth

While most are optimistic about the future of the tech industry, bosses of UK startups have significantly less confidence in their businesses than those elsewhere (Getty)

If you set up your own company, will you necessarily make a good chief executive in future? It seems that not even the most entrepreneurially-spirited are convinced.

According to a new study, the majority of people who have set up their own tech company consider their ability to evolve and adapt from being a founder to being a CEO to be the biggest risk to business.

While most are optimistic about the future of the tech industry, where the majority of startups operate, UK leaders have significantly less confidence in their businesses than those elsewhere, according to research released on Friday by venture capital firm Highland Europe.

The findings are based on interviews with 173 company leaders, 92 per cent of whom are European and two-thirds are founders.

The vast majority of founders (74 per cent) pinpointed their own ability to evolve from a founder to a CEO as the biggest risk to their company’s growth, while 49 per cent of those surveyed agreed that the ability of the founder to manage their business effectively was a significant risk for scaling startups.

Despite hesitancy over their own competencies though, most company leaders expressed confidence in their startup’s potential, with 69 per cent of European businesses stating they believe their company has unicorn potential - achieving a valuation of at least $1bn - although the proportion of UK leaders (47 per cent) was significantly lower.

But UK leaders did demonstrate strong faith in the prospects for tech businesses in the country in general, with 79 per cent saying they were optimistic about the future of the industry. In Europe, the figure was 80 per cent and for the rest of the world it was 82 per cent.

Of the 173 startup leaders who participated in the survey, which was conducted in April, 68 per cent were currently scaling or growing, 32 per cent had expanded previously and 28 per cent were planning to do so in the future.

Their responses show that challenges start to escalate as soon as companies begin to expand. Of businesses either preparing to scale or those in the process of doing so, 61 per cent said that their greatest challenge was building sales and customer acquisition. Finding senior talent and professional management was identified as the second greatest risk, at 58 per cent.

The latter issue was singled out by 64 per cent of businesses that had already scaled as their greatest obstacle during expansion, ahead of establishing the right organisational structure for their company (49 per cent).

Tony Zappala, partner at Highland Europe, said: “Scaling a business successfully is an incredibly difficult thing to do. There are challenges at every turn and the ones that can really trip up a founder are not always the ones you’d expect.

“Interestingly, as a business grows, its major concerns over building sales and customers become slightly less critical. In fact, this research suggests that pre-scaling businesses may overstate the challenge of sales and customer acquisition. As growth continues, increasingly management issues surface, including the ability to hire senior talent and managers.”