In this Chart of the Week, we break down the average amount of capital raised by the number of founders that started a company. This may seem arbitrary, but it is widely accepted in the world of venture capital that having too many founders is not good for the success of a company. One Senior Associate at GE Ventures explained to a Chicago Business Journal, “Unfortunately, six founders are simply too many. Two, maybe three, co-founders with very complementary skill sets is ideal.”
However — like much of venture capital — this is not an exact science. Having many founders could lead to leadership disagreements if the vision for a company isn’t well-defined. At the same time, the more founders a company has — specifically from different academic and professional backgrounds — the wider the network that the company can access for funding and other resources. While the question of multiple founders isn’t cut and dry, many VCs treat it that way. So what about individual investors in the online equity market? To answer this question, we determined the average amount raised according to the number of founders companies had. The data for this chart covers January 2020 to the present and represents equity deals only.
Overall, it seems that the crowd is far less picky about the number of founders than the typical venture firm. When it came to the online private markets, there was little correlation between the number of founders a company had and the amount of money they raised. Companies with six founders raised the most on average at just over $493,000 — however, only two companies in our database fell into this category. Amounts varied only minorly among companies that had between one-to-five founders. All of these companies raised around $350,000 on average.
Again, we see an evident change in investing practices between traditional venture capital and individual startup investors. This divergence creates more opportunity and enables companies that might have been ignored by venture firms to secure funding. The democratization of startup investing continues to facilitate the evolution of private equity, and KingsCrowd is proud to be documenting these trends.
Note: all data used for the Chart of the Week comes from the KingsCrowd database and represents a snapshot of the crowdfunding market.
Wall Street has Morningstar, S&P, and Bloomberg
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About: Olivia Strobl
Olivia comes to KingsCrowd with a background in venture capital and technology. She spent time at Glasswing Ventures, an AI-focused venture fund in Boston, before joining the KingsCrowd team. There she helped develop machine learning algorithms for the opportunity qualification of preseed and seed-stage startup companies. Prior to her time at Glasswing, Olivia worked in a lab studying the neural correlates of attention. She holds a degree in Neuroscience from Wellesley College.