Solo Startup?

  • Within contemporary startup culture, it’s portrayed that successful businesses are started by a team, with each founding member offering complementary skills to the cause.
  • There are, however, many successful businesses started by one person, Amazon provides a powerful recent example.
  • Being a founder and having a startup does not require that you build a scalable technology company. Lifestyle and small business molds can be a good fit for single founders and provide lucrative paths, both financially and professionally.
  • Investors drive the narrative that startups need to be scalable and started by teams, because they typically provide the highest potential for financial returns. Teams are also aligned with their interest as investors, due to the operational, governance, and equity burden splits between multiple founders.
  • Pros
  • Full control: Freedom to build exactly what you want, to your exact specification.
  • Grow at your pace: Space to choose how to deploy the cash flow in the business.
  • Self development: Opportunity to learn topics outside of your core arena and iterate with various productivity hacks.
  • Equity: The control and economics of the business will remain on your side.
  • Cons
  • Lonely: It can be an existence of solitude that requires constant self motivation.
  • Quixotic pursuits: Your bias and lack of neutral counsel could lead you down some dead ends.
  • Investment: It can be harder to raise money as a solo founder, which may result in ceding advantage to deeper-pocketed competitors.
  • Perception: Potential employees, customers, and investors may perceive you as being an autocrat, which may limit options.
  • You will need to have a grasp of all rudimentary concepts related to your business-even if you delegate tasks, you cannot do it blindly. To succeed, you need to be consistently open to learning and grasping new things quickly.
  • Delegation to both people and machines will allow you to scale your efforts and focus on the core task at hand. Embrace SaaS/subscription-based services and freelance talent to help you with areas that are not your core strength.
  • You can create proxy co-founders by carefully choosing your first hires. The mix of the wide work remit on offer and stock options will correctly incentive early staff members.
  • Change your environment regularly to refresh your senses and build our your personal network. Don’t use your bedroom as an office.
  • Approach raising investment differently from the story that you read in the press. Become your own version of a celebrity founder by focusing on highlighting how your track record and career has led you to this point.
  • Try to get investors to come to you by appearing in their data mining efforts. Promote yourself strategically online and through sources of private company data. The negotiation dynamic flips when you receive inbound interest.

Paradigm: Businesses Should Only Be Started by Teams

What Is a Startup? What Is a Founder?

Do Venture Capitalists Invest in Solo Founders?

Control and Governance

Operational Risk

Returns

Is a Single-person Startup Right for You?

Pros

  1. You can do exactly what you want. For stubborn, decisive, and introverted (Think: INTJ) people, starting your own business can be an attractive prospect. You will live and die by your own decisions and make no compromises.
  2. Grow at your own pace. The potential aversion of investors towards solo founders will mean you will have to bootstrap and be careful with growth. The benefit of this is that you can iterate slowly and take gratification from the progress made.
  3. Explore the limits of your own capacity. You will be stretched, but for types that like productivity hacks, outsourcing, and self-development, starting a one-person business will be your own petri dish of “Ferrissian” experiments.
  4. Keep all the equity and control. If, and a big if, your business succeeds, you will reap the windfall and keep it all for yourself.

Cons

  1. It will be lonely. There are ways to mitigate this, but one core reason why teams are celebrated is for the camaraderie and journey taken together.
  2. Bias may ruin you. Your stubbornness and lack of pushback may lead you down dead ends.
  3. Limited investment options. The difficulty in raising funds could stall growth and/or lead to you ceding advantage to faster competitors.
  4. Potential employees may shun you. Some workers may not find it appealing to join a single-person startup, due to the risk to them of having to abide by a solo founder’s idiosyncrasies.

How to Maximize Your Chances of Success Going It Alone

ABL: Always Be Learning

You Have to Delegate to Accumulate

Use Your Environment as Inspiration

Don’t Follow the Usual Fundraising Path

Have a Track Record and Exploit It

Let the Investors Come to You

Alternative Sources of Capital

  1. Bootstrap. An obvious point, but a luxury that not all will have.
  2. Accelerators and grants. As mentioned earlier, these can be as valuable for their intangible benefits as their tangible ones.
  3. Working capital management and trade financing. Assuming that you’re growing a small business prudently, it’s most likely that you will be making accounting profits in the near future. An impediment to growth though will be your cash conversion cycle and the ability to fund growth with cash flow. Aside from managing this carefully, trade invoice services may provide you with the cash flow that you require during times of need, over pure equity financing.
  4. Debt. Lenders like to see a track record, stability, and assets on a balance sheet. That’s why most early-stage startups do not get the luxury of borrowing. If you generate a combination of these three factors, then there could be a chance of getting a loan or, alternatively, peer to peer or short-term facilities may be appropriate.
  5. Equity crowdfunding.Raising equity from retail investors is not “easier” and does not have more relaxed terms. Retail investors, though, invest with a different mentality. They like being evangelists for a product/service and empathizing with founder backstories.

Build the Business That You Want, Not What Others Say You Want

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Imagination is the key to unlock the world. I am trying to unlock mine.

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Lonare

Lonare

Imagination is the key to unlock the world. I am trying to unlock mine.

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