Can You Raise Money If Your Co-Founder Quits?

line in sand

It’s not uncommon for one or more of the founders of a startup to decide not to work on the statup full-time after the company’s first institutional financing. Such departures happen for a lot of reasons.

Sometimes the founders have a falling out early in the company’s life, in other situations founders realise that there isn’t a clear need for their skill-set in the company going forward or they decide that they want to pursue a different career path.

While a founder’s decision to pursue other activities can be a signal to investors that they don’t believe in the merits of the startup, this does not necessarily prevent the remaining founders from raising capital.

As long as there is an acceptable reason for the founder’s defection, investors will likely evaluate the opportunity based upon the merits of the remaining founders & management team. Ultimately, investors are generally focused on who will be leading the company going forward. 

Mark Peter Davis is a New York City VC and member of the DFJ Gotham Ventures team. This post originally appeared on his blog, Get Venture, and it is republished here with permission.

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