Dear elizy: I was wondering if you would mind giving some insights on startups with a small team (in my case, the sole founder) and are looking up to scale up the business? Would you recommend growing the team first and then consider fundraising? Do you think VCs would be happy to fund a startup with a sole founder? Or would VCs think the startup is not capable of acquiring quality teammates?
– Flying Solo from Hong Kong
Dear Flying Solo: Great question! Unfortunately, it really depends on the investor. There are some investors who adamantly will not back solo founders because they think it is just too hard to start a company alone. Then there are many others who do not care.
At 500 Startups, we don’t care whether you are a solo founder. Solo founders aren’t given a break – they are expected to achieve as much as companies with multiple founders, which inherently makes it harder to be solo. That being said, we have backed a number of solo founders over the years who have gone on to do quite well.
Here are some examples of successful companies that have been started by solo founders. Techcrunch created a report suggesting that many VCs will back solo founders.
As far as raising money goes, every early stage VC is looking for “big ideas with big markets” (subjective) and strong teams. So having a strong team – regardless of whether your teammates are co-founders or employees – will be important in raising money. Unless you have a strong track record, it’ll be difficult to raise money with no teammates.
To attract such strong teammates, unless you have a great network, often you’ll need to show some execution progress on your idea to show that you are serious about your business and worth teaming up with.
Given where I think you are, I would recommend starting with whatever team you’ve got now (sounds like it is just you?) and work towards product/market fit. In parallel, for skills that you are deficient in, I’d start looking for someone with that skillset and use your progress on your business as a way to demonstrate commitment. This person may eventually evolve into a co-founder or may turn into an early employee. In my mind, the only difference between a co-founder and an early employee is the level of equity and control on the company. So whatever you do, don’t rush into teaming up with someone who has significant equity and control if you’re not 100% sure about him/her in terms of skillset-fit as well as compatibility-fit.