The Single Founder Hypothesis
A founders' first task is to validate her business, not find a co-founder.
In the startup world there are two truisms that are regularly aired which deserve questioning.
- Approach investors once you have a product and some traction
- Approach investors as a team; a team of two is more appealing than a team of one
Paul Graham from Y-Combinator put it like this;
What's wrong with having one founder? To start with, it's 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.
But even if the founder's friends were all wrong and the company is a good bet, he's still at a disadvantage. Starting a startup is too hard for one person. Even if you could do all the work yourself, you need colleagues to brainstorm with, to talk you out of stupid decisions, and to cheer you up when things go wrong.
He is wrong on the first point.
- Just because an entrepreneur has lots of friends it doesn't mean that any of these are suitable to partner with (skills, experience, aptitude)
At Forward Partners, we're solving for the second point.
Agreed, starting a startup is hard and you need a support team. The first support doesn't need to be a cofounder.
In lean startup fashion, we have a hypothesis.
Our hypothesis is that we can repeatedly back single founders who can create successful businesses with our support.
The help we provide is through our team of experts who assist with customer discovery, coding the first version of the product and attracting the first customers.
By the time the entrepreneur comes to recruit her cofounder (we help with this too), she can do so from a position of strength. With product-market fit established, the founder can attract a higher quality pool of talent and is able to give less equity to the co-founder.
We already well on the way to proving this. At Forward Partners we have already backed 3 companies when there was just a single founder; ParcelBright, SnapTrip and AppearHere.
They received their first equity funding from us pre-product and as single founders. We're happy with the progress to date. All have since gone on to build products and teams. We're now looking for ways to regularly repeat.
To summarise, we believe that at the heart at every company is a great entrepreneur. We also agree that forming a great team is essential. With our help, a single founder has the chance to first validate the business model before forming the team.
There are investors prepared to invest pre-product with single founders - and right now, we're one of them.
We have an Open Day the week after next where we will offer our help to four early stage ecommerce teams. If you'd like to apply to join us, get in touch.