Time Commitment
Early-stage fundraising is the sole responsibility of the founder and CEO of the company.
While in later rounds other executives can help, early-stage fundraising is the sole responsibility of the founder and CEO of the company. It is also rather demanding, quickly turning into a full-time job for anywhere between 6 and 9 months. This is a long stretch of time during which the business is effectively handicapped because the leader is partially absent from day-to-day operations.
And yet, not dedicating your full attention to fundraising is one of the easier ways to fail to secure a funding round. Make sure you don’t fall into that trap, while still ensuring that the company stays on track. I share a few tips on how to do that in Offload Responsibilities to Others.
Don’t Share Fundraising Responsibilities
Founders often ask whether it makes sense to share fundraising responsibilities with another co-founder or perhaps an experienced exec. In my opinion, this is not a good idea in early-stage fundraising for three reasons:
First, from a team perspective, early-stage VCs invest above all in the CEO. This is because the CEO has a unique position - the buck has to stop somewhere, and in a company it stops with the CEO. There is a lot of uncertainty in new ventures, which can’t be meaningfully reduced. Investing in a startup means trusting that the CEO’s judgement and grit will help the company survive and prosper. Thus, investors are primarily trying to assess the CEO. If they are not up for the job, the startup is unlikely to succeed and therefore investing in it doesn’t make sense.
Second, investor meetings that feature multiple cofounders tend to be awkward. It is hard to strike a good balance between who talks how much in a way that makes each founder look impressive in the eyes of the investor. If the cofounders talk about equally, then who is really in charge? If they talk unequally, then why waste the second person’s time with this meeting? If they remain quiet, then are they even impressive? This dynamic tends to get worse the more founders are present.
Finally, from a startup-building perspective, it is definitely better to have someone clearly in charge. New ventures prosper when they can act quickly. That requires having someone, who is empowered to make hard decisions that the entire organization gets behind right away.
So my advice, barring special circumstances, is to keep it simple and have fundraising be a full-time job for the CEO, as per expectations and best practices.
For completeness sake, here is an example of a special circumstance that might be worth making an exception for: a founding team that has multiple entrepreneurs with prior fundraising experience. If you end up going down that path, make sure to have an internal discussion and plan accordingly. You don’t want to have to scramble to coordinate mid-fundraise.