Resource Constraints Spark Creativity. Why Resourcefulness is our favorite Skill in Entrepreneurs

In the venture world, you often hear about the importance of having a vision, a plan, and a team to execute on it. But what happens when you don't have enough resources to make it happen? Entrepreneurs who thrive under constraints have the special skill of resourcefulness. Resourcefulness, defined as the ability to do a lot with a little, is a skill that we actively look for in entrepreneurs.

If you ask a venture investor what they look for in founders, you might probably hear "storytelling", "the ability to sell a big vision", etc. While selling skills are undoubtedly important, resourcefulness is a skill that we consider more valuable than any other attribute. When a founder is too good at selling and operates in a resource-rich environment, it can be difficult to tell if they are actually skilled or are just lucky. One way for us to spot resourcefulness is to find the founders who are already operating in a resource-constrained environment. Often, the founders who become resource constrained not by choice, at some point realize that what they saw as a constraint actually has a benefit at the end.

We have dozens of very resourceful entrepreneurs in our portfolio, who have succeeded despite significant constraints. One example, Uqora, a company that makes products to help prevent UTIs, launched with less than $2M total raised and a team of just 2.5 people. Despite these constraints, they were able to scale quickly and eventually sell the company in just four years. Similarly, Cooler Heads, a Health Tech company in the cancer care space, got their product built, FDA-approved, and on the market with less than $4M in funding and a lean team. They went from idea to commercialization in just four years as well. Chatmeter, a company that helps businesses manage their online reputation, grew to $10M ARR with less than $5M total raised and a team of just 12 people, and also had a very successful exit despite the constraints they faced early on.

Moreover, resourceful entrepreneurs have specific skills or crafts that they can leverage to create value. By focusing on these skills, they are able to solve problems and create unique value propositions. This is in contrast to today's most glorified entrepreneurs, who are often generalists with the skill of storytelling and persuasion, but lack a specific skill or craft that they can leverage to create value.

At Crescent Ridge, we believe that resourcefulness is a key skill that entrepreneurs should cultivate, even if they have all the resources they need. Resourceful entrepreneurs can turn constraints into opportunities and come up with innovative solutions that others might not see. Therefore, if you possess the skill of resourcefulness, do not hesitate to flaunt it, as it can be a key differentiator that sets you apart from others.

As Plato said, "Necessity is the mother of invention".

Maria and Allison