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Ask HN: Does my co-founder need to quit his job before we seek seed money?

7 points by corford ↗ HN
Is it common for seed funds (like Kima15 for example) to expect co-founders to have quit their jobs before being approached? Or is there another way to do it that lets the fund commit to investing but on condition that the deal only closes once the co-founders have quit their existing jobs and come on board full time (with say a fixed time period for this to happen within e.g. 45 days)?

In my case, my co-founder wants to come on board full time but can't afford to quit his senior position at an existing well funded start-up until I have at least some guarantee that I can get a seed round together.

8 comments

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namenotrequired
Are you full time yourself? I'm by no means an expert but I was under the impression that at the seed stage, they expect at least one of you to be full time. You might need a very good answer though, to the question of "how do you expect me to believe in you if you don't". (That question probably goes unspoken often, so if you have a better answer to it than they will expect, you might want to answer it before they ask.)

I've upvoted you, I'm NOT speaking from first hand experience so I really hope someone with more experience can give better advice. Good luck!

corford
I was hoping for a few replies as well as I'm really struggling to find anyone in a similar position that's gone through it. To answer your question, yes, I'm full time and have been working on it for almost 18 months. Bootstrapped with all my savings and some family money.
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corford
Also, commitment wise, I've already plowed close to USD $70K in to this of my own money and I'll have a fully functioning MVP up and running in January (which will be before I start talking to a seed fund). So I think it's fairly obvious I believe in the project.
lacker
It's a fairly strong negative signal. Convince your cofounder to quit his job and convince him that you will definitely get funding. It will be a good test of your leadership skills.
corford
Thanks Kevin (just followed you on twitter btw). The negative signal is what I'm worried about.

In your experience, do you think I have a chance of successfully counter balancing that with the fact that I've already committed a large amount of my own money, built a fully functioning MVP and have a team ready to go? i.e. this is well beyond the pipe dream and fancy power point presentation stage.

dakrisht
It really depends. Generally, once big money is involved (500k ), you should both be full time.

I totally understand where you're coming from. Full-time co-founder here with my counterpart having a full time job (a resident physician at that!). It's tough but it works somehow especially since we are at the seed stage. But once we start raising real money (1M ) there's no way he'll be able to continue IMO. It can work but it's best if everyone is full-time.

I do know of a company with a co-founder who is also a resident physician and they just raised $3M. So there's a real-world example of it working out. And being a resident physician at a top-2 school is a much more difficult position to drop out of - there's no going back.

Most investors will ask for 100% time commitments but if you spread responsibility it can work (like the above scenario).

What matters most is: are you guys getting shit done? Are you making forward progress? Things can always be better and more efficient but if you're moving forward - keep moving.

You'll know when you need to propose the ultimatum to your co-founder. If there's money on the table and he has to quit, it's easier vs. the assumption (risk) of money being there.

Finally - add a few more players to your team. Offset the work to great people. It will not only make you more efficient but will show investors that people want to work with you. And they're committed to your product without having real cash flow. As a CEO, one of the most exciting things is getting great people to work with you. It's a great feeling and proves leadership. And some good 'ole fashion convincing. Good luck.

corford
Thanks. So I guess it can be done under the right circumstances.

>What matters most is: are you guys getting shit done?

Shit is most definitely getting done. A fully functioning MVP will be up and running in January and my co-founder is ready to quit his job and join immediately if we get a seed round in place.

I've also got a third guy who's great at what he does and is ready to be our first hire (again, once we have some seed money available).

Also, in terms of the size of the seed round we'd seek, it's going to be a lot closer to $150K than $500K.