Home Startups I Finally Figured Out Why Investors Won’t Invest in Solo Founders | by Aaron Dinin, PhD

I Finally Figured Out Why Investors Won’t Invest in Solo Founders | by Aaron Dinin, PhD

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photo courtesy Marcel Ardiban upon unsplash

One of the most sacred “rules” in the world of startup investing is that investors don’t invest in individual founders. Sure, there are occasional exceptions, but exceptions are rare and always have good reasons for happening. For example, VCs occasionally invest in random individual founders who somehow manage to make a ton of money. We also invest in individual founders who have successfully launched multiple pioneering companies. But aside from such exceptional scenarios, entrepreneurs stepping into a fundraising pitch as an individual founder will be told to take the hike.

Personally, as someone who likes to work alone, I’ve always found the “we don’t invest in solo founders” rule to be arbitrary and restrictive. Shouldn’t investors be more concerned with the merits of the companies being pitched than the number of people starting them? I’ve met a lot of individual founders who I think can do it.

“So what happened to that stupid rule?” Individual founders often ask me. “Why are investors so reluctant to invest in companies started by one person?”

Until a few weeks ago, there was no good answer. At that time, my wife was out of town on her nine-day business trip and I stayed home to care for my two young daughters, aged 4 and her 7.

As any parent knows, raising a child is hard work, even with two adults trying their best. How were you going to survive being a single parent for over a week? But it turned out to be the same reason VCs don’t invest in solo founders.

A few days into my solo parenting week, I had just put my daughters to bed and was relaxing on the couch. I surprised myself by putting the children to bed early. “I’m good at this,” I thought. “It’s not hard to raise a child alone. In fact, it’s much easier than co-parenting.”

When I blamed myself for doing well, I was worried about my relationship with my wife. If parenting alone was easier than parenting together, did that mean my wife and I weren’t as compatible as we always thought? Most correspond to two little humans wreaking havoc in our lives. I always thought my kids were the cause of all the drama in the house, but what if I was wrong about my wife after seeing how easy parenting was? What if the problem is actually the woman I thought was my best friend?

Of course, none of that is true. my wife is not a problem. My kids don’t really matter either. The reason it’s easier to raise a child alone than it is to raise a child with a wife is the same reason why it’s more fun to start a company alone than to co-found it. Specifically, parenting and entrepreneurship become easier because no one is held accountable for doing something they don’t want to do.

For example, my family does not let our children watch TV on weekdays. On weekdays, I come home from school and can’t watch TV, so we play together and the time we spend playing is making a mess of our house. Left unchecked, within minutes of coming home each day, we’ll take out a pile of toys and scatter them around the room, turning the house into a disaster zone full of dolls. But when I was raising my kids alone and couldn’t see them up close, I ignored the “No TV on weekdays” rule and made them sit in front of the TV as soon as I got home. They turned into zombies and I could focus on making dinner without worrying about my kids destroying my house. In other words, it was parenting bliss.

But it was also irresponsible.

Toddlers should not stare at TV for hours. They should learn through play and experimentation. But even though I knew it, I let the kids sit in front of the TV, because my wife wouldn’t hold me responsible.

The same thing happens to individual founders. Indeed, solo founders tend to be happier than co-founders, and also tend to be more confident about their company’s chances of success. Not because they are better entrepreneurs building better companies. Instead, single founders are like me when I’m raising my kids alone. They avoid doing difficult, important, and more valuable work in exchange for making life easier and more enjoyable.

Investors understand this. They are more likely to skip the hard things they don’t want to do when founders run the business without co-founders, and instead spend all their time doing work that all entrepreneurs enjoy. For example, investors know that entrepreneurs love to work on products and complete fundraising pitches. Why? Because making products is fun and collecting a lot of money is attractive and impressive.

But rarely is the most important part of building a startup what entrepreneurs enjoy doing. The most important jobs for entrepreneurs are sales, marketing, customer support, etc. In other words, what counts is tedious, tiring, messy, repetitive, and thankless “busy work.” It’s also the kind of work founders avoid when they’re working alone.

In other words, without the accountability of having co-founders, lone founders are a lot like me as a lone parent. Even knowing that, I do what I want in the way that works best for me. You may be happy with that trade-off, but investors aren’t.

DELTA Data Protection & Compliance, Inc. Academy & Consulting – The DELTA NEWS – info@delta-data-compliance.com

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