Angel investing · Venture capital

Angel investor or VCs take on a Solo-founder Startups?

Ema Chuku Product Developer. Founder.

October 5th, 2016

Obviously, a startup with a team of cofounders vs one with a team of employees has its pluses and minuses (I do not think either is better). Despite many going the "co-founders" route, personally I lean towards a solo-founder with a team of employees, for reasons some will understand and some won't.

So questions is: In your experience, are angel investors, VCs, etc willing to invest in a startup comprised of solo-founder and employees?

Alejandro Cremades Author of The Art of Startup Fundraising & Serial Entrepreneur

December 15th, 2016

My take here is that being a solo founder will be a very lonely journey on what it is an emotional roller coaster of ups and downs.

Note that being a solo founder will also send negative signals as it will show how you were not able to recruit someone onboard early on. This opens the door to interpretation and people may think that you are lacking sales skills.

Startups are all about storytelling and showing a clear path to on how you intend to execute your vision, especially early on. If you are not able to recruit a cofounder, people will think you will have in the future the same issue with recruiting team members as well as investors.

Keeping the above in mind, angels as well as VCs will see being a solo founder as an added risk to potentially seeing returns or their money back so my recommendation here would be to avoid at all cost going at it alone.

Mauricio De la Orta Serial Entrepreneur and Investor

December 16th, 2016

I've started 7 companies, 6 as a solo and never had a problem. My investors though, weren't your typical Silicon Valley VC's, but people who believed in the missions and in my capacity to execute them....

While I was living in SV, if found that many people will wait until they find someone they can found with in order to take action... in my experience this is wrong.

If you have the skills and an idea on how to get to your goal, why not start today? You can always find amazing people and investors along the way!

Rupert Meghnot MBA CXO, Burnout Game Ventures, LLC

December 19th, 2016

Depends on who you ask. Your research should indicate whether-or-not the target investor(s) prefer co-Founders. While the climate may be different now, I've had a number of successes funding sole Founders - who all had stellar Advisory Boards (including myself - also currently pursuing that path).

Peter Browne Successful businessman, social entrepeneneur

December 16th, 2016

I have been a co-founder of a successful business. It was with a friend and slowly it began putting more strain on our friendship. In that one I was the less experienced and it helped to leverage his background. But the difficulty became when the business began to be modelled more and more around his thinking and less around a mutual model. Ultimately when sold he received the lions share of the profit.

I have started 2 other business now with great experience as a leader and certainly feel that I will build the business solely in my direction. I have also brought in staff quickly to do things to grow the business. A well experienced sales man is definitely worthwhile to help mould things. I also use a blend of advice from independent advisors, staff, family and interested parties.

Anyone is welcome to get in touch for how I could share my experience

Mark Lieberman Chief Startup Officer and Director, Advantage Accelerator at Oregon State University

October 5th, 2016

Investors bet on the team. A solo founder is acceptable with a few provisions: key man insurance AND a good secession plan with at least one or two employees that can fill in rapidly. 

Additionally, I usually require an ESOP for employees. I probably would not invest without one.

Martin Omansky Independent Venture Capital & Private Equity Professional

December 19th, 2016

Irrelevant. The strength of the opportunity is mostly in the idea itself. One can always gather up the talent and resources to translate the idea into a business. Of course we always look for: (1) uniqueness and comparative advantage of the idea; (2) commercial potential of the idea; (3) ability of the law and the circumstances to protect the idea; (4) sanity of the progenitor of the idea. To be fair, we have, on occasion, rejected an otherwise meritorious deal because the founders were naive, unrealistic, too optimistic, dishonest, untalented, or difficult to work with. In such cases, there was a team - unsatisfactory to be sure - but in place. Sole founders, however, should be prepared to work with and share equity, expenses, and rewards with new team members and investors. It is repetitive, but never inappropriate to say that forming and running an enterprise is always a group effort.

Mike Robinson

October 5th, 2016

I don't think founder status is really the question. The question is whether the team is up to the task.

Sure, there might be one founder but if she has recruited some employees who are talented and experienced and are putting skin in the game -- well, that almost makes them co-founders (even if they joined 6 months or a year later). 

If there is just one executive and some paid low-level employees or interns, that increases the risk factor around the team. It indicates that the founder either: a) couldn't attract high-caliber partners, or b) doesn't play well with others and doesn't want partners, or c) this idea is so small that it only needs one executive. 

Tom DiClemente Management Consulting | Interim CEO/COO | Coach

October 5th, 2016

It's going to depend on how you come across as a solo founder with the management team otherwise filled by salaried employees. For a startup, given the same set of necessary skills, that usually means a higher payroll. But most of all, the question is, does the key management team have skin in the game and some anticipation of upside. If not, the question becomes whether they have the motivation to see things through to building a well performing self sustaining company, or through to a profitable liquidation, whichever is the goal.

Additionally, I don't see why you prefer one over another if you're the entrepreneur? Which direction you take usually depends on the team that can be assembled to build a successful company and not on your personal preferences.

Nofyah Shem Tov

October 5th, 2016

If you go it alone, you better have a well of energy for the first year. You'll be marketing, selling, advertising, tech support, customer service, etc. My advice is to automate as much as possible. Nofyah

Martin Omansky Independent Venture Capital & Private Equity Professional

October 5th, 2016

Yes. We invest in what is in front of us. If the team needs beefing up, or if the enterprise needs any sort of amendment, we can help to supply it. The governing item we look for is the business opportunity, which for our groups, are opportunities to exploit substantial technical or scientific breakthroughs. Other factors, which may also be important, can be added to the mix. The rare commodity for us is the significant business opportunity produced by a sustainable comparative advantage. Others may have different criteria, and that is OK, too, because it is a very big world, and opportunity takes many forms. Sent from my iPhone