Written By: Kelly Bryant
Getting a business off the ground requires making lots of decisions. These decisions include deciding what the company will be called, how it will be incorporated, where it will be incorporated, what problem it will solve, etc.
But there’s one decision that comes before all the others that will most certainly shape the future of the business in its entirety: deciding who will be building the business in the first place.
Ah yes, the Founding Team…
Should you be a solo founder? Should there be two of you? Three? Four?! In our experience helping early stage tech companies, there are some interesting implications in deciding the size of your founding team. This is especially true when you throw fundraising in the mix.
Let’s break down each:
- Building a business is mentally and emotionally challenging. It can be a lonely road when you’re a solo founder and being alone can accelerate burnout. We have some investors in our network that go so far as to say they will not invest in solo founders due it’s risky nature. Not only does raising capital as a solo founder mean you have two full-time jobs, but you’re also missing out on the complementary skill sets that a Co-Founder could bring to the table. That said, the major pro to being a solo founder is that you can streamline decision making and ultimately get more of the reward if you’re successful (a big ‘if’). If you are a solo entrepreneur, consider bringing in another Founder – Y Combinator’s Founder Matching platform is a great resource to get the ball rolling.
- For a long time it was believed that the ideal Co-Founding duo was the ‘hacker and the hustler’ – aka a technical leader (usually CTO) and a well-versed business leader (usually CEO). More recently, there’s been a new philosophy adding the ‘hipster’ to the mix as Co-Founder #3. This person would ideally come in as a product and/or design lead to round out the team. Whether you’re a Founding team of 2 or 3, we’ve found this to be the sweet spot for investors in our network, assuming there’s one person taking the lead as CEO and decision maker. Co-Founding teams of this size are able to bounce ideas off each other, manage workload and leverage each other’s unique skill sets and perspectives to gain a competitive advantage.
- There are exceptions to every rule, but in our experience, teams of 4+ Founders aren’t ideal. This is for a few reasons. For starters, decision making becomes more like a committee with ‘too many cooks in the kitchen’ to get things done. Furthermore, lines start to blur as it relates to the cap table and equity distribution. From an investor’s perspective, seeing four founders split equity evenly knowing they are facing multiple rounds of dilution can leave each founder with a relatively small percentage of the company. If you do end up opting for a larger founding team, make sure role responsibilities and decision making abilities are crystal clear and consider reflecting that in your equity distribution.
Whether you’re thinking about starting your own company or in the early days of getting a business off the ground, set yourself up for success. Choose your Founding team wisely and remember – you’ll likely be working with these individuals for years to come. Make sure you’re ready to embrace all of the ups and downs with them that startup life is sure to bring.
Kerosene Ventures – Helping Great Founders Raise Capital