Solo or in a Syndicate: Ways to Start as an Angel Investor

Some stats, jokes, and a better solution
Barbara Krassner
🇬🇪 Uniborn Team
3 min read

Surely, you've heard that startups have a mere 1% chance of becoming unicorns. For emerging angels, the crystal ball is even more cloudy: it takes years of hard work, network mojo, and a fair amount of luck to spot a project with true potential.

So here's the main question for aspiring investors: should you go alone to increase your clairvoyance or gather a team? Some swear that the more, the merrier— unity and diversity equal success, right? Others say it is better to go alone, without the inevitable friction and inhibitions of group work.

At Uniborn, we are all about debunking the "either/or" myth. And there is a way to combine the best of both worlds.

If investors are like founders, then autonomy is key – or is it?

Venture capitalists are essentially a breed of startup founders themselves. They dive into innovation and embrace risk with open arms. Since no one seems to be studying the difference between the impact of individual versus group investing, let's turn to the data that compares these two opposing approaches to entrepreneurship.

So, do founders want to be independent or be team players? Bret Waters (pretty famous investor and CEO of Silicon Valley's global startup accelerator 4thly) says that this is one of the longest-running debates — "If you ask three people in Silicon Valley, you’ll probably get five answers."

The conventional wisdom is that "two heads are better than one" — the idea of diversification seems infallible. And then there are legends like Y Combinator's Paul Graham, who believes that founding a startup alone is the #1 mistake that kills a startup.

Solo founder develops a business strategy. (Image: Shutterstock)
Solo founder develops a business strategy. (Image: Shutterstock)

Now for the numbers. Researchers from the University of Pennsylvania and New York University surveyed more than 18 thousand creators of projects on Kickstarter. The study can be considered obsolete (2018 seems like a million years ago, huh?), but something tells us that the ratio hasn't changed much. So, here's what they found:

  • Single founders are 2.6 times more likely to succeed in a commercial venture than three or more co-founders.
  • Individualists are also less likely to dissolve or suspend their business, 54% and 41% less likely than teams of three and two, respectively.
  • It's a different story for nonprofits: lone wolves are 42% less likely to succeed than teams of three, but they're just as likely as teams of two.
Image: Greenberg, Jason and Mollick, Ethan R., Sole Survivors: Solo Ventures Versus Founding Teams
Image: Greenberg, Jason and Mollick, Ethan R., Sole Survivors: Solo Ventures Versus Founding Teams

Even back in 2016, a TechCrunch journalist analyzed 13.5 thousand Crunchbase profiles of successful startups (he treated teams as successful if they raised more than $10 million or successfully exited the business through an IPO or M&A).

In the first group (i.e., among those who attracted millions of dollars), nearly half of the companies had a single founder. Just under a third of the teams had two leaders, and only 22% had three or more. 

In the second group (those with the exit jackpot), more than half of the startups were solo-driven. Again, just under a third of the companies had two co-founders, and about 18% had three or more.

Image: Crunchbase & Techcrunch
Image: Crunchbase & Techcrunch

Both studies are open to criticism, especially since other available data undermine the claims. For example, strong venture capital player First Round Capital claims that "a hacker, a hustler, and a hipster" outperforms "a lone H" by 163%(!) and has a 25% higher initial valuation.

Let's sum it up and zoom in on venture investors

We've jumped headfirst into the world of founders, but we're trying to wade through the territory of investors — here, the game may change, right? To weigh the pros and cons of solo versus squad, here are some practical things you will surely face when choosing one of these paths.

Let’s explore what a solo venture investor is up against:

  • An echo chamber effect. Without a co-investor to bounce ideas off, it's like playing ping-pong with the wall. A co-player is not just an ally but also a challenger who will shed light on why your brilliant idea might just be missing the mark. 
  • A poor skill set. VCs often thrive on the fusion of complementary experiences. Of course, you can always hire, but an employee and a voluntary contributor are not the same thing — and hiring can be a costly ordeal, especially early on.
  • A need to always be on guard. It's about maintaining a basic work-life balance with the reality that newborn soonicorns won't wait for you to finish other things. 
  • A small fund. Money matters, and if the investment pool is a tad shallow, it can limit the range of potential targets. 

On the other hand, when you invest on your own, there are no compromises and no conflicts to navigate — you can turn the wheel nimbly.

As for joint investing, there are some eventual problems such as:

  • A delay in decisions. In the realm of teamwork, the road is paved with alignment among the members. And breadth of perspective may lead to a slower decision-making process. 
  • A risk of conflict. Healthy debate stimulates creativity, but it can also escalate into showdowns that affect productivity and overall morale.

There are also several benefits: shared responsibilities, complementary expertise, diverse insights, networks, and resources. 

The joys and sorrows of solo and co-investing are comparable. So, which path to pursue?

Combining the best of both worlds and avoiding their drawbacks is possible. 

At Uniborn, we want to share a valuable strategy: follow those who pique your interest and unite only when it makes sense. Whenever your chosen trailblazers share their stories, reserve allocations, or lead deals, expect prompt app notifications (unless they prefer to do so privately).

We empower investors to cherry-pick in perfect harmony with their tune — acting independently, forging a cartel or seamlessly joining an existing one, whether for a single deal or a series of opportunities
Dmitry Samoilovskikh, founder and CEO of Uniborn

Cover image: Unsplash

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