If you’re looking to start a venture-backed startup, the ideal number of founders is one, two or three, but ideally two.
The number of founders should a) cause no issues with fundraising, b) promote a low-drama workplace, and c) be few enough that the founders have sufficient equity even after several rounds of fundraising.
Solo Founders Are Risky
While great companies have been founded by just one person, there are some clear risks. Risks range from burnout to lack of access to capital to inability to grow the technology and business simultaneously. Before a company is funded, all the work is done by the founding team. A single founder can find it hard to hit the phones or get out the door to meet with customers while simultaneously building product.
Investors Like to See One or Two Founders
Investors lower their risk by investing in companies that fit a certain mold. Founders who look like Mark Zuckerberg or duos who remind them of Larry Page and Sergey Brin have an easier time getting funding because they conform to investor expectations. Having more than three founders breaks the mold, and as such is a red flag to investors. Sometimes this can amount to out-and-out discrimination, which may perpetuate the problems of homogeneity in the developer community.
A smaller founding team also suits investors because they have to split their equity with fewer people. Fewer decision makers means faster negotiations and board meetings.
Ideally, both founders have technical skills. Engineers are smart people and can often just as easily cultivate business leads as develop code. The dream team for an investor is two engineers, one of which has great communication skills.
Having Fewer Founders is Better for the Founders
Giving all four of your friends who started the company together C-level titles and 25% of the company is a recipe for disaster and, at best, high drama.
With four cofounders, none of them will have more than 10% of the company after two rounds of fundraising. Founders do well to have at least 20% of their own company on the other side of a series A. When founders have less, they are less incentivized to stick with the company and their decisions can be overruled by a board. They literally lose their company sooner.
Life happens, so as people get married, get sick, grow bored, or quit, they can potentially walk away with valuable equity. If they haven’t vested into the company, then this is a huge problem. It can happen with two founders, but the probability becomes a certainty when there’s more than three founders.
However Many You Have, Vest In
However many investors you bring on board, it’s vital that you all agree to a vesting schedule. You’ll want to make it clear that everyone gets all their equity only after they stay with the company for long enough.