Why do Investors Choose Multiple Founders Part 2
Most startup investors are looking for the best founders possible. There is a trend among investors to choose multiple founders, and it has become quite popular in the industry. Companies like Facebook, Google, and Groupon have multiple founding teams. The main reason behind this trend is to bring in more innovation, speed development, and scalability. Even some other startups like FourSquare and Zynga also have multiple founding teams. Investors are taking note of these companies' history by investing significantly in early-stage startups.
Many investors feel like having multiple founders leads to greater creativity and potentially more innovation of a company's product or service. The reasons behind this choice can be found in the differences in personalities, visions, and goals of the founders and investors alike. Let’s discuss why multiple founders make good sense for investors.
Table of Contents
What do Investors Look for in Founders?
Investors are looking for founders with a proven track record as a founder. They want to see that founders have the experience, skill set, and network necessary to build a company from the ground up and make it successful.
The best founders have gone through the process of building companies before, whether that means starting their own business or joining an existing team. It’s important to have experience in your field, but it’s even more important to be able to communicate your vision clearly and effectively with potential investors.
In addition to being an entrepreneur themselves, investors often seek out entrepreneurs who will work closely with them on their investment strategy. They want people who can help them achieve their goals by sharing ideas and collaborating on how they can best leverage their resources.
Investors are looking for founders who are willing to work hard and be entrepreneurial. They want to know that the founders will fight for their vision, even if it means taking risks. They want to know that the founders have a strong set of skills and experience in the industry they plan on entering. They also look for potential revenue streams, as well as the ability to execute them.
The best founders are good at building teams and helping others succeed. They’re able to see past the obvious — what is possible and what is not — and focus on what is truly important. They understand that it takes more than talent or a good idea to build a successful company.
Investors look for founders who know how to make money but not at the expense of their values. Investors need to be able to see that you are a product of your environment and that you can work with others to create something new and impactful.
Founders should be able to show a strong understanding of the market and its needs. This goes beyond knowing how to build an app or website; it means being able to understand why people want what they want, how they can get it, and what value it provides them.
You'll want to demonstrate that you have an innovative idea and are willing to take risks to bring it into existence. Investors are looking for founders who can make bold decisions, but also ones who aren't afraid of failure.
Investors look for founders who have the right combination of traits. Here's what they're looking for:
1. The ability to learn and adapt quickly.
2. A passion for their idea.
3. A willingness to work hard and overcome challenges.
4. A willingness to take risks.
5. The ability to execute an idea.
The 3 Aspects of Co-Founder Chemistry
A founding team is a group of individuals who come together to tackle a problem, solve it, and begin building something new. They share a vision, an idea, and a passion for making their venture successful. But that’s not enough: they also must be able to work together as a unit to achieve their goals. For this team to succeed, they need each other.
When you look at any startup, you’ll see that it has a co-founder relationship between two founders (or more) who are working on the same project or idea. But what makes these partnerships work? How do they form? What are the key aspects of these relationships?
The first aspect is personality chemistry. It is important to have a good working relationship with your co-founders, as they will be there for you when things get tough. If one of them is more aggressive than the other, it could be very useful to have someone who can keep the peace and calm down a situation when needed.
The second aspect is technical chemistry. This includes how well do they work together on technical issues, how much experience they have in dealing with those issues, etc.
The third aspect is business chemistry. This refers to how well one group works together as a team, which usually means sharing ideas and being able to communicate them clearly and effectively.
What are the benefits of having a co-founder?
You can't have the best of both worlds when you have multiple founders whereas a single founder may suffer from the missing piece. successful companies are usually started by multiple founders with complementary skills. Co-Founders raise your chances of getting funded. Here are the benefits of having a co-founder:
Investors choose multiple founders because multiple founders reduce risk.
Diverse knowledge and skills.
A better chance at success.
Not all-in on one person.
They have a deeper bench.
Investors always have a more secure feeling with more than one founder.
Two heads are better than one, and three are even better.
The founders can divide up the responsibilities among each other so that no one gets overwhelmed.
There is less risk for an investor when investing in multiple founders because more people must be proved wrong before the company fails.
This experience of starting a company together can be a bonding experience for friends, or it can be a good way to bring strangers together who have great ideas but need someone else to help get the business going.
Starting a business is an endeavor that requires many skills and qualities, and no one has them all. It's best to find others to fill in your gaps.
You are less likely to burn out.
You are more likely to get a diverse perspective from each other.
You can focus on a single skill and not have to worry about the rest.
You share the workload.
Less risk of fraud, corruption, or theft and better control over your business's finances.
It can make it easier for you to hire employees who are passionate about your company's mission.
It gives investors confidence in your startup because they know that someone else is working hard with you too distracted by life outside of work.
Conclusion
If you're an entrepreneur looking for that first round of funding, you've probably asked yourself before why investors seem to prefer teams to solo founders.
The differing perspectives, personalities, and opinions make for a more dynamic and engaging environment. A co-founder can help develop a wider array of ideas, often providing connections that the other founder may not have. This increases the odds of success by expanding the network to include more resources. While one founder may be an idea person, a co-founder can work with product development, financials, press interviews, etc.
Like many things in the business world, it's not so much that they prefer it, but they've found that teams tend to fare better with investors than solo founders do.