There is a common belief that in order to successfully build a company, you need a proper team to start. So, does it mean it is impossible to build a single-person startup? The answer would be NO. While nothing is impossible, the road to go there might not be easy and is less travelled.
Single-person startup refers to a solo founder who is keen to build his own startup without the help of co-founders. Research by Rosie Haft found that single-founded startup is common out there but hidden. More than half of approximately 3200 startups are actually founded by one person. Surprisingly, the success of a solo founder is better than a team-founded startup with 2.6 times more likely to own an ongoing for-profit venture than teams of three or more co-founders.
What startup to run as a single-person founder?
As a single founder, do you have limitation to what kind of business to build? The quick answer is NO. You can run every single unique idea you have in mind.
But startups can be categorised into different types based on its purpose and business model. This is important to acknowledge yourself about the types of startups for your fundraising strategy. According to Steve Blank, there are six types of startups described as follows:
- Lifestyle startup which is built based on an entrepreneur’s preferred lives and skills. The example of this startup is freelancing.
- Small business startup which is often owned and managed by families such as family-run café or store.
- Scalable startup with a vision to expand with the help of venture capital. The examples include Uber, Google, Twitter, and Facebook
- Buyable startup which is built to be sold to larger companies. The goal is to create a product or offer a service that competes with large companies, then sells it to competitors for profit.
- Large company startup with a goal to identify changing trends, customer preferences, tech advancements, and offer new or innovative services or products to customers.
- Social startup is not driven by profits or growth. It is built to create a positive social impact.
The obstacles as a solo founder & its solution
Being a solopreneur is not a walk in the park. Unlike startup that employs a team to help with difficult coding or administrative matters, being a solopreneur means that you have to do everything by yourself. If you want to run a scalable or larger company, the obstacles would be bigger.
To tackle the challenges, you need to have a learner mindset. Keep improving and keep learning from others. Then, build a mission to acquire any creative skill that can help you build your business such as coding, email marketing, design, etc. Dave Bailey suggested to at least learn these five key skills.
- Wireframes are simplified versions of product design, consisting of boxes, lines, and simple text. You should also learn how to use better PowerPoint or Keynote. These basic designs help you understand customer needs
- Prototypes to make your design more functional. You can learn from online media on how to build a prototype. To make your design more professional, you can take inspiration from other design but remember, be you and be creative in your own way.
- Copywriting which will help you to sell your business.
- Personal websites are a fundamental part of a business. You have pocket design and little coding skills earlier so it will be easier to build your own websites. Besides, website building platform such as Wix and WordPress can help you with the basics.
- Email marketing to cultivate a readership for your new business idea.
Fundraising challenge and its solution
Growing startup needs investors to help scale the business, yet many angel investors disdain solo founder because they think the risk is greater than team-founded business. Alex Graham, a trained treasurer and CFA, commented that there are at least three major issues for a solo founder when proposing for fundraising.
- Control and governance
Solo founder will own the entire founding stock in a business, thus when the business is scaling, the founder has the absolute power to his founding money. On the contrary, when investing in a team founded business, there is no individual power. So, it will be safer if there is a need for rational choices in which money is spent.
- Operational risk
There is also an operational (internal) risk when investing in a one-person business. For example, there won’t be any outcomes for the investment if the founder falls ill, loses interest, or changes business direction drastically.
The goal of an investor to invest in a business is to make a huge return. Therefore, if you run a startup that seems to not scale large in future, let’s say lifestyle startup, investors will pause their deal or no deal at all.
So, how to do a fundraising presentation as a solo founder?
As a single founder, you can start fundraising when you are about to have a growth spurt or benefit from seasonality. This will keep your growth ticking over and you can also show the right metrics to showcase your startup credibility.
Alternatively, you can focus on angel investors who are keen in investing a solo-founded business. The trick is, every investor will invest as long as your business is promising. So, focus on doing your homework to cover up everything that is likely to be asked to solo founder such as how do you plan to scale your business in future? How passionate are you with your business? Or what are the key metrics of your business?
Lastly, enjoy the process!
Next read: Understand Your Business, Know Your Types of Entrepreneurship