How Diligent is your People Due Diligence Process?
- Receptiviti
- Jul 30
- 3 min read
The quest for the next unicorn - or even just above-average returns (alpha) - requires VC and PE firms to take calculated risks.
But what level of people risk is acceptable? And more importantly, how do we quantify it?
Founder due diligence typically involves evaluating a team’s experience, capabilities, and vision, along with their ability to execute against a business plan.
But soft skills: how a founder thinks, leads, and motivates - are just as critical. And with many new ventures failing due to interpersonal dynamics or leadership breakdowns, it's time to focus more intently on the person behind the pitch.
Fortunately, advances in language-based analysis now allow investors to assess these psychological factors without disrupting or adding friction to the diligence process.
To better understand a founder’s capacity to lead and scale a business, investors should pay close attention to three core psychological dimensions: thinking style, leadership style, and motivations.
1) How Does This Founder Think?
Thinking style reflects how individuals process information and approach decision-making. Do they rely primarily on instinct and emotion? Or do they favor a deliberative, test-and-learn approach?
Many successful entrepreneurs leverage a structured thought process as they develop and implement business plans. However, it can be less common to find a planner and visionary in one person. Understanding the diversity in thinking style of the founder and broader leadership team allows investors to consider if the team has what it needs to translate a vision into reality.
Sample Insight from real, anonymized founder data analyzed through Receptiviti: This individual demonstrates a slightly intuitive thinking style, favoring fast, experience-based decision-making over slower, methodical reasoning. Their wide score range suggests above-average cognitive flexibility, indicating the ability to shift between intuitive and deliberative processing depending on context.
2) How Does This Founder Lead?
The ability to take charge, articulate a vision, and drive outcomes is often considered table stakes. But equally important to diligence is understanding an individual’s capacity to build trust, foster collaboration, and shape long-term culture.
At Receptiviti, we evaluate leadership style across two well-established dimensions: agency (confidence, decisiveness, authority) and communion (empathy, relationship-building, team cohesion). When we find leaders with the capacity for both agency and communion, we call these balanced leaders inspirational. Our research shows that companies run by CEOs who score highly on both dimensions generate higher, sustained returns.
Effective leaders often have a dominant style, which can be augmented by diverse members of the leadership team, helping to offset gaps. Understanding leadership styles across the team can help investors determine if the team has the skills required to execute on a plan and build a culture that employees want to show up for, that equally drives results.
Sample Insight from real, anonymized founder data analyzed through Receptiviti: This individual demonstrates a moderately Coaching leadership style, characterized by high communal and average agentic tendencies. They are likely to lead by empowering others, facilitating collaboration, and promoting shared ownership, while still providing goal-oriented direction when needed.
3) What Truly Motivates This Founder?
Motivators, like the need for achievement, power, affiliation, or recognition shape how individuals engage, persist, and make decisions. They also influence what kind of culture a founder is likely to foster - or avoid.
Understanding a founder’s motivational profile can help investors anticipate behavior under stress, align incentives more effectively, and build healthier post-deal relationships. It’s a key input for long-term partnership and performance.
Sample Insight from real, anonymized founder data analyzed through Receptiviti: This individual demonstrates a slightly elevated need for affiliation, suggesting that connection, belonging, and interpersonal harmony may be especially important to their motivation and engagement. Their achievement and power drives fall within executive norms, indicating a balanced, stable orientation toward goals, influence, and status without over-reliance on dominance or recognition.
About Receptiviti
Built on decades of validated science, Receptiviti enables investors to evaluate founder psychology using one of the most underutilized but information-rich data sources available: language.
Our platform analyzes the words founders use: in diligence meetings, interviews, or recorded calls to generate insights across thinking style, leadership orientation, motivational drivers, and many other psychological factors.
What’s Next
We believe that language-based psychological analysis is an essential complement to traditional diligence practices, and a powerful lever for mitigating people risk in investment decisions.
We’ll be publishing a deeper dive into this approach in an upcoming whitepaper. In the meantime, if you're interested in exploring what Receptiviti insights might reveal in your next founder meeting, we’d love to connect.
Get the Latest
Fill out the form below to subscribe to our semi-regular newsletter or follow us on LinkedIn for first access to our upcoming whitepaper and future articles.
