My Prospective VC Is Asking For Personality Tests?

“They want us to take personality tests?” My team looked appalled. “Yep,” I said, “And we might even learn something ourselves from the process!”

I was scanning through yet another email of VC due diligence questions: comprehensive cap table details, name of legal counsel, customer case studies, IP freedom-to-operate analysis, and so on, when my eyes landed on one that I knew would get my team’s anxiety up:  “As part of diligence we ask the leadership team to participate in a short team personality assessment. It is a short internet-based survey that allows us to better understand each team member’s style and underlying motivations.”

I was not too surprised. Lead VCs had asked me before at other startups for precisely this sort of thing with precisely the same preamble.  Perhaps that was why I knew that I needed to clarify who from my team the VC wanted to participate in the assessment and to have a conversation with each of them.

Raising venture capital is always a stressful experience for a startup company leadership team. Everyone is seeking to put their best foot forward.  Personality tests feel uncontrolled, somewhat threatening, and possibly invasive. Everyone gets nervous. What will the test show about me? About us? What are the VCs looking for? Could this derail our fundraising?

The reality is that, as due diligence progresses, some VCs will ask for the management team to take personality tests. Not every venture firm uses these tools, but some certainly do. I have encountered such requests a few times in my career – and it is certainly not outside the norm to be asked.

Rumor has it that some VCs use a battery of personality tests to assess a management team and might even be influenced in their perception of the capability and compatibility of the team when reviewing the results. Therein lies the sense of threat that the startup team feels.  However, in my discussions with most VCs on this subject, it is more common for them to focus on using these tools as a way to get to know the members of a management team quickly. This can help them better understand the people who make up the team and gain insight into how to best engage with them.  

Validated personality tests are a quick way to accelerate the getting-to-know-you process.  In fact, part of me appreciates those VCs who take an interest in getting to know who the team members are at a deeper level. It shows a concern for the human beings who make up the startup, an interest in what motivates them, and an awareness that interpersonal compatibility and conflicts can have an enormous impact on the ability of the team to succeed.  The personal chemistry of a team and the balance of personality styles can facilitate or impede working together. 

Wise VCs know that, as Board Members, one of their fiduciary responsibilities is helping the startup succeed – and that translates into helping the team succeed. Serving on a Board means routinely interacting with the startup leaders and sometimes supporting the team as it inevitably navigates some rough waters. The interest of the VCs in the team dynamics is a routine subject for Board meeting executive sessions. When I think of uses for personality tests, using them to help navigate complex interpersonal dynamics and support the team seems like a good one.

VC’s using personality tests this way is similar to how I sometimes use personality tests within a startup – as team-building and hiring assessment tools to evaluate job fit. Tools used vary. Some I have encountered include Myers-Briggs Type Indicator, Belbin Team Roles, Predictive Index, DiSC Assessment, and others. Taken by the test subject themselves (rather than a third-party), such personality test profiles can capture personality tendencies in a reliable, accessible, and positively framed way. While, of course, these tests categorize people imperfectly and can never capture every nuance of an individual, they can provide frameworks for understanding and embracing behavioral differences in a constructive way. 

Besides helping the VC get to know your team and, hopefully, using the personality test results to support your team more effectively, I think the process of doing these tests during due diligence can be helpful to a startup management team as well.  Typically, VCs will share the results of the tests (including possibly the profile for the incoming VC Board Member) – and that opens up a team-building opportunity if the team can embrace the insights offered by the tests as a way to learn about each other. Shared openly by amongst the team members, these tests can be useful artifacts for discussion as a team continues to grow in its working dynamic. Most of these tests can facilitate a deeper appreciation of each other’s strengths.  When a team is willing to take one of these instruments and discuss the results together, it can lead to better insights about ways we can be helpful to each other as well as leverage each other’s strengths.

At the end of the day, if a VC asks a team to take personality tests, saying “no” is really not an option. So keep in mind that the request is probably an indicator that the VC values the team aspect of the startup – and the profiles can be a tool for learning as a team as well. Embrace the opportunity!