Should You Build a Startup Alone or With a Partner? Here’s What VCs Say
by Akarsh Dhaiya
It’s a question long debated in startup and scholarly circles from the world over — who performs better: the startup with a solo founder or a co-founding team?
First off, there is no one definite answer as previous debates and discussions on the subject have all boiled down to two words: it depends. It depends on who is asking, what they value, and what they are trying to pursue.
Let’s start with the who. When one asks the VC firms, from those based in the US to the EU, the consensus has been generally the same: they prefer to fund co-founding teams for the belief that two heads (or more!) are better than one.
In the second episode of my podcast, The European VC Journal, Corne Jansen, a director in Amsterdam-based VC firm INKEF Capital gave a blunt take on the debate. “Being a single founder is an extremely lonely job. You not only have to convince the outside world that the direction you’re taking is the right one, but you also have to convince yourself every day that you are going the right direction,” he said.
Jansen, who is part of the team that evaluates startup pitches on a regular basis, said he and his colleagues always look for the founder, or co-founders’ “excitement” when pitching a business. Not only does one have to sell an idea, but his or her personality and business acumen as well. INKEF has supported 37 startups (majority of which are led by founding teams) in the healthcare and tech sectors, including NightBalance which has since been acquired by Philips, and GitLab, one of the leading code-sharing platforms in the world.
“There’s always an element of doubt in starting a business. For a solo founder to be able to convince both the team and himself every day that everything is okay, is challenging,” he added.
With that kind of pressure clouding an entrepreneur’s mind every day, it wouldn’t be surprising to find an entrepreneur with a big idea to partner with an expert or a trusted colleague. Sharing a drink with someone you trust after a long day at work also doesn’t sound too bad at all.
Early reference of VCs on team founders
Even earlier on, Silicon Valley-darling Y Combinator, one of the leading accelerators in the world, provided an insight into the debate, when its co-founder Paul Graham cited “being a single founder” as the number one reason why startups fail.
In a blog post in 2006, Graham, who has helped the seed accelerator fund over 2,000 startups worldwide, wrote “[Having one founder] is a vote of no confidence. It probably means the founder couldn’t talk any of his friends into starting the company with him. That’s pretty alarming, because his friends are the ones who know him best.”
That’s a pretty solid point, but it banks on the belief that friends and family would understand even the most innovative business ideas. It may be hard to convince loved ones to support a concept that’s been simply not done before, or when, in most cases, the odds are simply against the idea. At that point, it wouldn’t be surprising if the entrepreneur decides to pursue the startup alone.
It’s what Jeff Bezos did in 1994 when he started Amazon as an online bookstore. Back then, the only way most Americans bought books were through bookstore chains or independent ones. While he did borrow the capital from his parents, Bezos was alone in the early, painful years of the business. From the time he conceptualized the website from his garage to the time he listed the company on the New York Stock Exchange in 1997. Today, Bezos is the world’s richest man as he led Amazon to become the fourth most valuable brand in the world, according to Forbes. The e-commerce giant breached the US$1-trillion mark in market capitalization last year.
To be sure, Bezos had more than a decade of experience in corporate before becoming an entrepreneur. His first job was as a programmer in a fintech firm that wanted to pioneer cross-border financial transactions between companies. Later on, he went into sales in another firm, then became a banker. Put simply, Bezos made sure he had the experience and know-how to finally a start a business he could call his own.
It’s most likely he’s the odd one out though.
All but one (Samsung Electronics) of the top 10 largest tech companies in the world are founded by co-founder teams. Even the two most prominent startups in Europe, Sweden’s Spotify and Germany’s Zalando, were founded by partners.
This isn’t to say the founders who chose to build a company with a partner or a team, were no visionaries like Bezos, nor did they lack the valuable experience in business to start a startup on their own.
But it’s possible that the founders may have just decided that the combination of their talents and skills, and the camaraderie that it brought upon the team could build a better company than if they decided to start on their own.
Which brings us back to the solo versus co-founding team debate, that it all depends on who is asking, what they value and what they are trying to pursue. Starting a business is already a challenge, but pioneering an idea that aims to disrupt industries or pioneer a new field is a different monster to tackle all together. In the end, it all depends on the entrepreneur if he or she is better off alone or with a friend.
Akarsh Dhaiya has an MBA from INSEAD and is a Managing Partner at Rocket Capital — listen to him unpack the VC and startup world at the European VC Journal (apple.co/2Izu3uD).
