There is a common belief that you have to have a partner to launch a business. However, recent insights challenge this idea, showing that solo entrepreneurs can be equally, if not more, successful than teams of founders. Nowadays, there are over 305 solo founder-led unicorns, including notable companies like Elon Musk’s SpaceX. And this number is constantly growing

The rise of solopreneurship

Paul Graham, co-founder of the influential startup accelerator Y Combinator, once wrote, "The low points in a startup are so low that few could bear them alone." This sentiment underscores a long-held belief in venture capital circles: backing teams is safer than supporting solo entrepreneurs.

This is a typical view of venture capitalists. Historically, they have favored teams over individual founders, viewing it as a less risky investment. The reason is straightforward: a single founder can easily become overwhelmed and burn out, potentially leading to the startup's failure. In contrast, having partners allows for shared responsibilities and mutual support, mitigating these risks. Simply put, two heads are better than one; combined skills, expertise, and networks offer a significant advantage.

However, this perspective is evolving. A 2016 TechCrunch analysis of CrunchBase data revealed that solo founders are just as successful in building businesses, raising funds, and achieving exits as their team-led counterparts. In fact, more than half of startups with an exit were led by a single founder. Today, there are over 305 solo founder-led unicorns. In fact, some of the well-known companies in the world like Amazon, Dell, eBay, Tumblr were set up by one person.

Further research from New York University (NYU) and the Wharton School confirms that single-founder companies often outperform those with multiple founders over time. Solo founders can make decisions faster, pivot more swiftly, and adjust strategies without the need for consensus—an agility that is crucial in a startup's early stages.

Conflicts among partners are another significant factor driving the solo founder trend. Studies show that disagreements are responsible for the failure of 65 percent of high-potential startups. Solopreneurs avoid this risk, retaining complete control over their business’s vision and strategy.

As I see it, technological advancements have further fueled this shift toward solo entrepreneurship. Today, no-code platforms and advancements in AI have made it possible for solo founders to build products and manage technical aspects without needing a co-founder with a tech background. AI-driven tools now significantly enhance software development efficiency, with one report predicting a tenfold increase in developer productivity by 2030.

Solo, but not alone

Truth be told, most successful "solo" founders are not truly alone. Research shows that while they might not have partners with equity and voting rights, they benefit from co-creators—employees, organizational alliances, investors, and board members. These collaborators provide expertise and second opinions, minimizing potential mistakes.

For first-time founders, however, finding such support can be daunting. From my experience, they often lack the connections and hiring expertise to bring in skilled people. Additionally, without a strong technical background, they may struggle to guide developers, identify necessary specialists, and assess potential employees' expertise.

In my opinion, venture studios offer a compelling compromise between starting alone and with partners. This is a relatively new type of venture entity that acts as a co-builder of a business. Ben Yoskovitz, in "The Many Flavors of Venture Studios," provides a useful test to define a venture studio: "If you build startups but don’t fund them, you’re more akin to a dev shop; if you fund startups but don’t build them, you’re an investor. A venture studio is a combination of the two."

As of July 2023, there were over 800 venture studios worldwide. They are gaining momentum thanks to advantages compared to traditional venture capital firms (VCs), accelerators, and incubators. Unlike VCs, which typically invest in existing startups, venture studios actively initiate and build companies from the ground up, often acting as co-creators. While accelerators provide short-term programs, venture studios engage with startups over an extended period, offering comprehensive support from ideation to scaling. They provide a more hands-on, resource-rich environment compared to incubators, nurturing startups with dedicated teams and shared resources throughout their development journey.

Venture studios as an alternative

But how exactly can a solopreneur benefit from a venture studio? Here are key takes:

Access to resources

Venture studios provide essential capital, reducing the financial strain on solo founders. They support startups from idea to exit with substantial investments, often exceeding millions of dollars. This financial backing helps develop stable late-stage companies and ensures that an experienced team supports the founder's vision. This mitigates the risk of being rejected by investors due to the lack of co-founders.

Enhanced skill set

Venture studios bring a diverse set of skills that complement the founder’s expertise, filling gaps in areas like marketing, finance, product development, legal issues, and administration. Additionally, they assist with hiring the right talent, ensuring the business builds a strong team from the outset.

Expertise and network

Venture studio teams are often composed of seasoned entrepreneurs. Therefore, they can provide mentorship and guidance to first-time founders. They can also offer access to a broad network of industry experts, investors, mentors, and corporate partners. These connections open doors to funding, partnerships, customers, and resources that are typically hard to access for solo entrepreneurs.

Risk mitigation

The collaborative nature of venture studios means that risks are shared, reducing the burden on solo founders. Professional risk assessment and strategic planning increase the likelihood of success and help avoid common pitfalls.

Accelerated growth

Venture studios streamline the startup process, reducing the time required to reach key milestones. According to recent research, studio startups reach seed rounds twice as quickly as conventional startups (1.49 years vs. 3.03 years). Moreover, it takes only five years for them to be acquired, which is 33 percent faster than non-studio startups. They also require a third less time to go public.

In conclusion, the landscape of entrepreneurship is shifting towards solopreneurship, challenging traditional notions that success necessitates a team of founders. Insights from industry leaders, research analyses, and technological advancements all contribute to this growing trend. While solo founders may lack conventional partners, they often benefit from collaborative networks and can leverage resources like venture studios to mitigate risks and accelerate growth. These entities represent a promising compromise between solo and partnership models, providing founders with essential capital, a diverse skill set, mentorship, and shared risk.