Tag Archives: Founder

Reasons to not invest

There are many reasons to not invest in a startup. Among others, these include concerns about the size of the market opportunity, the startup’s ability to capture value from its product, the competitive threat, the business model, and the investment terms.

Among potential reasons to pass, some are not related to the founder. For example, in the list above, this includes concerns about the investment terms.

However, most of the reasons to pass are in fact derivatives of the founder. In the list above, it’s the founder who decides to pursue a small opportunity, builds a startup in a part of the value chain that makes it difficult to capture value, is unlikely to be able to outperform competition, and is unable to build a strong business model.

So when you’re not investing in a startup for one of these reasons, which is most of the time, you’re not investing primarily because of the founder.

Not everyone is a founder

Our startups have anywhere from 10 to 250 employees. The average is probably around 30.

And our startups have anywhere from 1 to 5 founders. The average is probably around 2.

This means that for every 2 founders there are 28 non-founders (30 employees minus the 2 founders). In other words, there are about 7 founders for every 100 non-founders.

Since large companies have a higher ratio of non-founders to founders than startups, the ratio of non-founders to founders in the overall economy is much higher.

Being a founder sounds hot. It sounds even hotter when startups are hot.

But not everyone is or should aspire to be a founder. It’s perfectly normal, in fact mathematically expected, that you’re not.