Do companies with co-founders do better than solo-founded ones? And how does this decision impact a venture’s success and attractiveness to investors?
The age-old question of whether a co-founder is a necessity has fuelled debates among entrepreneurs, investors and industry experts alike. Are startups with two or more co-founders truly destined for success? Do investors have a distinct preference for companies with co-founders?
Statistics have shown that while companies with co-founders may raise more funding, this doesn’t always lead to better business outcomes.
One Wharton study analysing more than 3,500 startups discovered that those run by a solopreneur tend to survive longer and achieve higher revenue.
Read more: Why impact investing is crucial, but a challenge for investors
Is more really better?
There are instances where two heads are better than one. Productivity, creative diversity and access to a broader network aside, co-founders can provide each other with the moral support that is key to overcoming the challenges and anxieties of running a startup.
Companies with two founders rather than one are said to be 19 percent less likely to scale prematurely. Another study found that solo founders are 42 percent less likely to own an ongoing, non-profit venture than three-person teams.
From the analysis of its portfolio companies, seed-stage venture capital firm First Round found that having at least one technical co-founder helps enterprise startups to outperform non-technical teams by 230 percent. By contrast, a technical co-founder could cause consumer startups to perform 31 percent worse than non-technical teams.
Read more: How this banker joined the sustainable food revolution and got his groove back
