INTERVIEW: Joanne Hosker, Northern Gritstone

Joanne Hosker is Head of NG Innovation Services at Northern Gritstone, the deeptech and life sciences investment firm.

Joanne Hosker, Northern Gritstone

Since joining from BGF, Joanne has been responsible for establishing Northern Gritstone's talent program, mentoring business leaders and connecting them with key operating partners and C-suite expertise.

She is a member of the executive committee and leads all aspects of the early-stage toolkit for the NG portfolio, supporting and accelerating growth.

As part of our new whitepaper on CEO transitions, we asked Joanne for her insights on how best to assess, support, and, when necessary, replace a founder-leader.

UP: When making a new investment, what attributes are you looking for in a founder CEO?

JH: For us, the most important quality initially is whether the founder proactively seeks support and is keen to quickly build a complementary team around them. This is vital.

The most successful founder CEOs we've seen are those who acknowledge their own strengths and gaps, surround themselves with experienced people, and utilise the knowledge those people have gained.

Research shows that startups that have mentors and hypergrowth experience within the core team grow faster and are less likely to fail. We are an ambitious VC; we want to back fast-scaling, super successful spinouts. If a founder isn't keen on bringing in people like this early on and benefiting from the proven impact they can have, then, for us, that's a no.

Do you have a particular framework for assessing a founder CEO’s strengths and weaknesses?

We have a few different ones. For example, we have a template to assess first-time CEOs, whom we can't reference with previous roles.

We look for self-awareness, team orientation, passion, and work ethic.

One of the key attributes we look for is self-awareness. We also assess vital qualities like team orientation, being customer-focused, passion, motivation, drive, and work ethic.

With technical founders, we want to see a willingness to develop their own commercial skills and ability to tell the story. Being able to ‘sell’ is important, even for those who remain in a technical role post-investment. Otherwise, they will struggle to lead and embrace the cultural change in their startup as they make the essential journey from being product-led to customer-led.

What are your red flags when it comes to founder CEO performance?

Not being willing or able to recruit good people around them is probably the biggest one. If they are struggling to recruit high-calibre people, it’s usually for one of two reasons: either they don’t feel comfortable hiring A-game people, or A-game people don’t find joining them appealing.

That suggests the founder may not be comfortable working with people who bring different skills and experience, or who challenge their thought processes.

Not allowing the board access to the senior leadership team is a red flag

My other red flag is not allowing the board access to the rest of the senior leadership team. Research from ScaleUpNation shows that for 80% of fast-growing scaleups, board members use coaching as a method of support; so it makes sense for all senior members to benefit from this. Secondly, if we are all united in the same goal, then everybody should be able to have open, transparent and constructive conversations together, without one person trying to control the narrative.

How do you strike a balance between providing support for founders and ensuring the business is prepared for succession?

You've got to set founders up for success. This means never putting them in a situation where it’s sink or swim.

Instead, provide support from the outset to bring in advisers and a Chair who has been a CEO themselves and knows what it's like to successfully scale and to sit in that hot seat with the weight of expectation on their shoulders.

It is vital that talent and succession are regular topics at board meetings. At the very least, there should be a proper deep dive into this subject every quarter, where you look at the capability of the people, how the team and culture are developing, how recent hires have landed, the performance of the CEO, and succession planning.

By making it a more frequent conversation, you have much more visibility, and you'll be able to address any challenges from an early stage.

Likewise, if you end up needing to make a leadership change, you'll have gone through a process to get there: raising it, challenging it, tackling it, and you’ll have started to plan for succession.

Making sudden changes often leads to disruption, attrition, and chaos. 

If you don’t deal with these issues early on, you end up in a lose-lose situation because making sudden changes often leads to disruption, increased attrition, lack of productivity, and in the worst case, chaos.

What are the most important factors in executing a successful CEO transition?

The best and only way is to have a united syndicate and board. If you're not aligned, it ends up elongating the recruitment process, which, in turn, risks losing your best candidates. A high-calibre CEO doesn’t want to join a company that’s disunited or disorganised.

Give yourself plenty of time - good CEOs will want to join with a decent runway

A company should set itself up in the best way possible to attract great people. Give yourself plenty of time—good CEOs want to join with a decent runway, so if you've left it too late before your next fundraising, it will be harder to attract someone (or you'll have to pay danger money).

Also, boards and investors should remember that there are many people in the company who are working super hard, who are emotionally attached to the business, have been there through the challenging early scale-up period, and are perhaps not as well-rewarded as they might be in a larger organisation. Ensuring a smooth transition for these individuals, some of whom may not have experienced this process before, is crucial to keeping them engaged and preventing attrition. 

Open communication is really important, and, if possible, having people hear from all those involved in the changes can reduce uncertainty and prevent any impact on productivity.

How does Northern Gritstone support portfolio companies in finding successors?

We don’t necessarily do anything different from other investors who believe that high-quality talent is vital.

We raise talent up the agenda and support our portfolio companies with experienced in-house talent advisers at NG, who can contribute to considering, assessing and finding talent.

We offer support in preparation for recruiting (eg. job descriptions, required attributes and skills, and conversations about organisational development), and then advise on running efficient processes.

We make introductions to recruiters (often at preferential, negotiated rates for the portfolio) who we know will represent the company well out in the marketplace and will be able to identify candidates who are the right fit for the stage and shape of the company.

As a VC, we accept we are not backing a finished team.

As a VC, we must always accept that we are not backing a finished team. We are backing a developing and expanding team that will look quite different in a few years’ time from how it does currently. So support with teambuilding and recruitment is an intrinsic part of the value-add we bring.

We also try to normalise open talent conversation early on—often pre-deal—discussing the fact that the team will be augmented regularly to ensure it is the best one possible for each growth stage.

By starting this dialogue early, you ensure that a talent plan is always in place, that progression becomes a natural part of the journey, and talent remains a differentiator for the business. 

---

If you would like to read the full whitepaper, 'Transitioning a Founder CEO', please contact us to request a copy.