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Do I have to have a cofunder in order to raise money from investors?

I am the CEO and sole owner of Calentic, an online events platform. I spent the last couple of years building calentic and my mvp is finally ready and online (only currently serving the in Seattle market). I am now looking to raise money from investors to further develop the product and expand to new markets. I am a product guy and have been advised to find a Marketing focused cofunder and get some traction on the site before talking to investors. Do I have to have a cofunder in order to raise money from investors? What king of tractions do I need on order to appeal to investors?

10 Replies

Irwin Stein
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Irwin Stein Advisor
Very experienced (40 years) corporate,securities and real estate attorney.
Floyd: You do not need a co-founder but there are tasks and functions (marketing, sales, accounting, etc.) that need to be handled. Investors need to feel comfortable that the company can operate successfully and profitably. People bring on co-founders when they cannot afford to hire people to perform these tasks.
Logan Kleier
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Logan Kleier Entrepreneur
Founder/CEO at SecondSight. We tame application sprawl with simple, actionable SaaS application usage data.
My experience is yes you need a co-founder. In your case, preferable a technical co-founder. With that said, I'd recommend bootstrapping your company towards traction, rather than seeking external investment first. Most investors won't give you the time of day if you don't have any traction, particularly in the market segment you're in. As to the amount of traction, every investor is different. There's no one answer unfortunately. However, I will say that Jason Calacanis is quoted earlier this year saying that you'd need more than $1.2M in ARR to interest investors for a Series A. So even if you back that off by half for a angel round, you're looking at $600K ARR for an angel round.
Christoph Ranaweera
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Christoph Ranaweera Entrepreneur • Advisor
Product Lead
about the co-founder question:
The relevant skills need to be covered in the company. If you are product you might need tech and marketing/sales.
Investors need to feel comfortable with the competences covered in the company as those impact the potential success (efficient and fast product development, same for sales and marketing how to get in customers fast and in an affordable way).
And there is nobody who can be great in all of those in one person.
The other aspect is responsibilities to lie on several shoulders.

Traction is difficult. Depending on the product, market and investor.
Boris Zubry
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Boris Zubry Entrepreneur
Chairman at AVICENNA THERAPEUTIC TECHNOLOGIES, LLC
If you have the skills, you do not need one.
Brendon Whateley
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Founder at Kugadi
From my personal experience, as soon as you have a product, the conversation with investors turns straight to sales numbers and even more importantly sales growth. So, in short, you do need to figure out how to sell it before funding discussions will make any progress.

A co-founder will really help with the workload and allow each of you to focus on different aspects of the company. Since part of the funding decision is around the skills the team brings, the stronger the team, the more confidence that you guys can make progress.

It all comes down to managing the risk of the investment. You need your story to scream success! Because it is very, very difficult to be successful. Consider these two stories:
  1. We founded Calentic several years ago and have 2 customers. I am looking for $800k to figure out how to ramp up our sales.
  2. I spent a couple of years building the Calentic product. Recently my co-founder with extensive event related sales experience came on board to take us to the next level. In the last 6 months grown from 2 paying customers to 25 and monthly revenue is growing at 25% month-over-month. We are looking for $800k to expand the sales team to ramp up in new markets using our proven sales model.
After you pick, consider that everybody else who is pitching the same investor also has a story to tell.

Good Luck.
Pat Dane
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Pat Dane Entrepreneur
Chairman, Founder at Trueseal Holdings Inc.,Chief Development Officer at Wounded Warrior CARE
I just raised $22 Million via a Lobbyist in DC. I've pasted in below a press release that he is sending out next week. I think this might be a big help to a lot of the members here. FYI

For Immediate Release

August 15, 2016

Leading Washington, DC Lobbyist introduces unique way of funding for a start-up company

Start-ups to Benefit from Lobbyist Services

(Arlington, VA) August 15, 2016 -Jack Burkman & Associates, Inc. (www.JackBurkmanRadio.com), an 18 year old Firm that specializes in raising money for companies through the Federal Government and the Congress. Burkman & Associates has collectively raised over a Billion Dollars for companies seeking to grow their business. "Our target base over time has been with firmly entrenched companies looking to avoid the public markets for raising growth capital". Burkman now wants to take his capital raising technique to the emerging technology market of Start-ups. The normal process for a start-up seeking Venture Capital (VC) funding is to give away 25 - 40% of equity in their company in return for the money.

"Our firm can now significantly help start-ups to avoid giving up equity in their company by seeking funds from inside the Beltway", said Burkman. The firm has plans for expanding its Client team to accommodate this new market. Burkman believes that his unique approach to the market can speed up the normal VC timeframe of 6-12 months to raise money down to 60 days for a Grant and 5 months for money from the Agencies or the Congress.

"We are ready now to accept new Clients as the 2016 Appropriations Bill is in full force for Hundreds of Millions of Dollars to be delivered to promising start-up companies in the HealthCare, Energy and Real Estate Markets" said Burkman.

Media Contact:

Jack Burkman

(email) JackBurkman2016@gmail.com

(cell) [removed to protect privacy]

Ken Anderson
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Ken Anderson Advisor
Director, Entrepreneurial and Small Business Development, Delaware Economic Development Office
Traction equals paying customers, revenues andprofits. The more of that you have, the more traction you have. The more traction you have, the more attractive you will be to investors.
Joe Valof
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Joe Valof Entrepreneur
Independent General Counsel [IGC]
Floyd, you can hire someoneto handlethe marketing/sales functions, don't need to call or refer him/her as aco-founder. Youcanhim aVP, give him stock, appoint him to the Board, so long as you maintain a minimum of 51% of the authorized shares. Also, keep in mind that most investors as part of the funding deal want a seat on the Board,so itmay not be a badidea to have another Board member to vote with you and prevent any attempt by the investor(s) to take control of your company.
Susan Marie Laws, M.A.
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0
Strategy, Organizational Transformation, Talent Consultant, Capital Markets: Author & Presenter.
I'm excited to research the 'lobbyist fund raising ' recommendation. As we know, there are several ways to raise capital; even so, whether it's a JV, crowdfunding, or angel funds, the founder capabilities are key to this phase of growth. My last company concept and cofounder bio were so compelling that the advising attorney wanted a small percentage in exchange for legal and fundraising. Remember a management consult, legal or the right cofounder can be the difference maker of company success and large multiple x at the harvest.
Adam Pressman
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Adam Pressman Advisor
I've helped a number of folks become millionaires. I'd like to do it a few more times.
One of the things we've learned in crowdfunding is that a team of four, especially a team mixed, men & women is more likely to get funding than any other number.
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