The People Factor: What We Assess During Due Diligences of Early-Stage Ventures
This blog summarises a chapter from the upcoming book, The Human Factors Behind Start-Up Success: A Guide for Investors, Founders and Due Diligence Providers.The People Factor: What We Assess During Due Diligences of Early-Stage Ventures
When investors evaluate start-ups or scale-ups, attention often centers on financials, technology, and market opportunity. But there's a vital dimension that can make or break a company’s long-term success: its people.
At Human Factor Health Check (HFHC), we’ve developed an evidence-based, pragmatic methodology to assess the human factors that underpin sustainable growth — offering investors clarity and founders meaningful insights.
What We Measure: Nine Core Factors
Through years of research and real-world application, we’ve identified nine essential elements that signal a company’s people strength:
Leadership team cohesiveness
Leadership team resilience
Clarity of strategic direction
Unity of purpose and execution
Agility and adaptability
Psychological safety
Dependability
Leader/employee alignment
Employee Net Promoter Score (eNPS)
We synthesise these into a visual Red-Amber-Green (RAG) snapshot, backed by quantitative and qualitative insights. This helps investors quickly assess leadership maturity and cultural health — critical indicators of a venture’s readiness to scale.
Beyond Metrics: The Power of Self-Awareness
At the heart of effective leadership lies self-awareness — for founders, executives, and investors alike. Our process helps leaders identify blind spots that could hinder growth or lead to repeated missteps. By drawing on models like the Johari Window and the Iceberg Theory of Behaviour, we surface not just what’s seen, but what’s driving behaviour underneath.
We encourage leaders to share the insights generated by our assessment internally, to build openness, strengthen cohesion, and turn differences into creative strengths.
Decision-Making and Healthy Dissent
Constructive dissent is the lifeblood of entrepreneurship. We observe team dynamics during assessments, looking for signs of open, inclusive decision-making versus conformity or dominance by a single voice. Drawing inspiration from decision-making research (such as the Asch conformity experiments), we help teams recognise where biases may limit innovation — and where respectful disagreement can spark better solutions.
Leadership Styles and Alignment
Leadership has a 70% impact on culture, and culture can affect profitability by up to 35%. Whilst self-reported leadership preferences (via tools like SHL’s Occupational Personality Questionnaire) are important, our assessment goes beyond to include short and targeted alignment surveys that compare leaders’ views with those of employees. This highlights whether vision, strategy, and culture are truly shared or only assumed.
We also examine the diversity of styles across the leadership team, which is essential for unlocking the long-term value of diverse teams. Whilst this may be out of favour in the short-term due to the current political climate, we stick to the science which tells us that diversity of thought makes for long-term, profitable growth. Political winds aside, diverse teams are preferable over homogeneous ones when it comes to assessing venture success through the human factors.
Resilience, Conflict Handling, and Sustainable Success
Resilience is another critical factor we assess — not as a standalone trait, but as part of a broader mosaic. We explore how leaders manage energy, setbacks, and stress, mindful that resilience is only one piece of what drives success.
We also observe how teams handle conflict: is there too much harmony stifling innovation, or unmanaged tension that blocks progress? Our aim is to encourage constructive disagreement, where new ideas flourish.
A Balanced, Ethical Approach
At Human Factor Health Check, we believe due diligence on the people side must balance depth with pragmatism. We work with investors and founders to define the right scope — enough to provide an accurate, useful picture without overreach. Our mission is not to catch people out, but to accelerate their success.
Final Thoughts
People dynamics are often the differentiator between ventures that scale sustainably and those that stumble. By investing in rigorous, thoughtful human due diligence, investors and founders alike gain the clarity they need to build resilient, high-performing businesses.
If you’d like to learn more about our approach or discuss how Human Factor Health Check can support your investment or venture, get in touch with our team today through the contact page.