Startup Life/Opinion/ Investors shouldn’t be afraid to back married cofounders Investor bias is grossly unfair to those who have chosen to be partners in both business and matrimony. Credit: Derek Thomson on Unsplash Credit: Derek Thomson on Unsplash \Startup Life How to build a personal brand on LinkedIn By Anisah Osman Britton 23 February 2023 Startup Life/Opinion/ Investors shouldn’t be afraid to back married cofounders Investor bias is grossly unfair to those who have chosen to be partners in both business and matrimony. By Diana Spehar Friday 27 August 2021 By Diana Spehar Friday 27 August 2021 Investing in early-stage businesses is more an art than a science. A key part of that art hinges on understanding the founder dynamics. And for some reason, many investors have decided that married cofounders aren’t a dynamic they want to bet on. But this bias is grossly unfair to those who have chosen to be partners in business and matrimony — and means investors miss out on some great companies. The hesitation is in part understandable; the disintegration of family businesses may make for exciting television, but it hardly fosters investor confidence. Main concerns, as shared by early-stage investors, include the blurred demarcation of roles and responsibilities, difficulty making impartial decisions and managing conflict and the risk of messy board dynamics post-investment. The strengths of married cofounders In reality, married founders looking to raise capital will find themselves in great company. One should look no further than the examples of Cisco, Marvell, VMWare, Eventbrite and Slideshare — all started by married couples. According to a 2010 study by Stern Business School, family businesses were run more prudently and were overall financially healthier than non-family ones. Jean de Fougerolles from Ascension Ventures observes that many husband-and-wife businesses, and especially those with young parents, tend to be underpinned by a strong social mission. Be it safety tech, or deep tech with eco-friendly applications, backing married founders may increase the size of the social impact market. Be it safety tech, or deep tech with eco-friendly applications, backing married founders may increase the size of the social impact market. When the partnership works, it provides unique leverage. Strong mutual understanding, unrestricted emotional access and contractual commitments to each other, the business and the creditors drive strong synergies. Veteran founders often establish creative daily rituals focused on pre-empting, acknowledging and addressing their partner’s needs far better than non-married founders. In the long haul, the devotion to the business and the accompanying sacrifice may come more easily if both founders form part of the business, says Sharon Pursey OBE, who cofounded, and has been running, the London-based start-up SafeToNet with her long-term partner and husband. The business may even insulate founders from unforeseen life circumstances, she says. Partner-run startups that have successfully raised investment credit their successes to the following attributes as well: A complimentary skillset, shared vision for the business and a clear demarcation of roles and responsibilities. Appreciation for various risk scenarios, and a clear position on each item on the shareholder agreement. Ability to attract top talent and neutrality in decision-making when engaging with the staff and broader management team. Allaying investor concerns Sam Gray and Michelle Gomes of Stephenson Harwood LLP consider that investors are likely to be mindful of the associated benefits of a strong founder team, but might seek to mitigate the risks of a relationship breakdown by expanding the team or by introducing specific deal terms. If investors still aren’t convinced, there are other ways they can mitigate concerns. They can also suggest that founders enter into service agreements that spell out their roles and responsibilities or hire external agencies to conduct psychometric tests, in order to gauge fit. Assuming both founders have seats on the board, investors may also wish to request the right to appoint a neutral chairperson who can help provide a counterbalance in board discussions. Founders can also help allay concerns by having a firm grasp of risk scenarios to the business and corresponding action plans and building a larger management team. As a general rule, management teams that extend beyond the two married founders are deemed lower risk. It’s important that investors be more open to different kinds of cofounders and cofounder relationships, especially given that we know the tech industry needs to embrace diversity to reach its full potential. And that includes married couples. Diana Spehar is Programme Lead, Venture Development at Wayra. Related Articles Founders, stop trusting your gut By Khyati Sundaram Click here to read more Rent-A-Robot Sponsored by Microsoft Click here to read more The UK’s most active accelerators, ranked By Isabel Woodford Click here to read more Lessons from a management expert: How to run a great one-to-one By Amy Lewin Click here to read more Most Read 1 \Healthtech Is Daniel Ek’s new body scanner worth the hype? 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