Hint: It’s the same reason most founders prefer working by themselves
One of the most sacred “rules” across the startup investing world is that investors don’t invest in solo founders. Sure, there are occasional exceptions, but the exceptions are rare and always have good reasons for having happened. For example, VCs occasionally invest in random solo founders who somehow manage to generate enormous revenue on their own. They’ll also invest in solo founders who successfully launched multiple prior companies. But, aside from those kinds of exceptional scenarios, any entrepreneur who walks into a funding pitch as a solo founder is going to be told to take a hike.
Personally, as someone who enjoys working alone, I’ve always thought the “we don’t invest in solo founders” rule feels arbitrary and limiting. Shouldn’t investors focus on the merits of the company being pitched rather than the number of people who started it? After all, I’ve met lots of solo founders over the years who seem capable of launching successful companies.
“So what’s up with that stupid rule?” solo founders often ask me. “Why are investors so resistant to investing in companies started by one person?”
I never had a good answer until a few weeks ago. That’s when my wife left town on a nine-day business trip and I stayed home to take care of our two young daughters, ages four and seven.
As every parent knows, even with two fully engaged adults, raising kids is exhausting. How the heck was I going to survive single-parenting for over a week? However, it wasn’t nearly as difficult as I thought, and the reason it was easier turns out to be the same reason VCs don’t invest in solo-founders.
A few days into my solo-parenting week, I’d just finished putting my daughters to bed, and I was relaxing on the couch. I even surprised myself by getting the kids to sleep early. “I’m pretty good at this stuff,” I thought to myself. “Solo parenting hasn’t been harder. It’s actually much easier than co-parenting.”
As I was patting myself on the back for a job well-done, I had a troubling thought about the status of my relationship with my wife. If solo-parenting was easier than co-parenting, did that mean my wife and I weren’t as good a match as I’d always assumed? After all, the vast majority of our challenges and difficulties as a married couple correspond to having two tiny humans wreaking havoc on our lives. While I’d always assumed my kids were the cause of all the drama in my home, once I saw how much easier parenting was alone, what if I was wrong about my wife? What if the kids aren’t responsible for driving me crazy? What if the problem is actually the woman I thought was my best friend?
Of course, none of that is true. My wife isn’t the problem. My kids aren’t really the problem, either. The reason solo parenting is easier than parenting alongside my wife is the same reason being a solo founder is more enjoyable than co-founding a company. Specifically, both parenting and entrepreneurship are easier because nobody holds you accountable for doing the things you don’t want to do.
For example, in my household, we don’t let our children watch TV during the week. Since they can’t watch TV when they get home from school on weekdays, they play together, and their playtime wreaks havoc on our house. Left unchecked, within minutes of coming home every day they’ll pull out piles of toys, scatter them across every room, and turn our home into a doll-filled disaster area. However, when I was solo parenting and unable to watch them as closely, I ignored the “no weekday TV” rule and sat them in front of the TV as soon as we got home. They turned into zombies, and I was able to focus on making dinner without having to worry about my kids trashing my house. It was, in other words, parenting bliss.
But it was also irresponsible.
Young children shouldn’t be staring at the TV for hours. They should be learning through play and experimentation. However, despite knowing that, and since my wife wasn’t around to hold me accountable, I sat my kids in front of the TV because it was easier for me to do the other things I needed to do without creating a huge mess.
The same thing happens to solo founders. Sure, solo founders tend to be happier than co-founders, and they also tend to be more confident about the potential of their companies to be successful. But their happiness and confidence isn’t because they’re better entrepreneurs building better companies. Instead, solo founders are like me when I’m solo parenting: They avoid doing the hard, important, and more valuable work in exchange for the things that make their lives easier and more enjoyable.
Investors understand this. They know when founders operate without co-founders, they’re more likely to skip the hard stuff they don’t want to do and, instead, spend all their time doing the work every entrepreneur enjoys. For example, investors know entrepreneurs love working on their products and perfecting their fundraising pitches. Why? Because products are fun to work on and raising lots of money is sexy and impressive.
But the most important parts of building startups are rarely the things entrepreneurs enjoy doing. The most important types of work for entrepreneurs are things like sales, marketing, and customer support. In other words, the important stuff is all the messy, repetitive, thankless “busy work” that’s dull and exhausting. It’s also the kind of work founders avoid when they’re working alone.
In other words, without the accountability of having co-founders, solo founders are a lot like me as a solo parent. They do the things they want to do in whatever ways work best for them despite knowing their choices aren’t as good for the other impacted people. While you might be OK with that tradeoff, investors aren’t, and that’s why they won’t invest in solo-founders.