If you are the only investor in your thing, then is a warning sign to everyone else. You never sold anyone else on the vision, so either the idea is suspect or the investor is a not trustworthy (or capable). Having other investors mitigates those objections.
If you are the only investor in your thing, then is a warning sign to everyone else.
I think any successful bootstrapped company might challenge that assumption.
It might be a warning sign to people who think you can't succeed without outside investment, who of course are mostly either outside investors themselves or other business people involved with funding somehow.
It might be a warning sign to people who think they're going to make easy money by being able to invest in a successful company, who are all outside investors.
I'm not sure why anyone else would care, and certainly I don't see why either the founders or their customers should.
Since the topic is Quora and startups of that ilk that are seeking funding, then my comment is completely accurate.
If you are starting a business and have no desire for outside funding, that is great. But if you go in knowing that you need outside funding and no one is interested, then you are in trouble. The situation of startups that hit the pavement seeking funding to no avail is all too common.
If success rates are much lower for single-founder/investor companies (and I suspect they are), then obviously it will put off potential customers, and even more so potential employees.
If success rates are much lower for single-founder/investor companies (and I suspect they are)
That suspicion is the sticking point for me.
Clearly there are many types of business that are effectively impossible to start without help unless the founders are already very wealthy. Most people couldn't afford to buy a factory and industrial equipment to start a specialist car manufacturing business, even if they had a team of founders who knew exactly how to build the most profitable car design in history and how to run a successful business selling those cars.
However, many other types that can start small and grow, with a level of initial funding that normal people might have available or be able to raise without relying on formal investment. Almost anything in any creative or service industry qualifies, and even several of the most successful retail brands in the world started as someone's family business selling out of one local store.
So my question is, for any business in the latter category, is there any evidence that:
(a) taking outside investment does corrolate with a higher success rate, by any useful measure of success given that obviously we could define it in several reasonable ways?
(b) any such relationship is causal, so the greater chance of success is definitely due to the money and not (for example) to the experience of and/or information available to the people running the business, both of which would tend to be higher at least for first-time founders if they had outside help?
Even a family business often involves several people investing. I don't think a two-founder business that didn't take outside investment is a red flag, but a one-founder business is.
Causality doesn't really matter in terms of putting of customers/investors/employees; if not taking outside investment is correlated with bad things, people will avoid you if you don't take outside investment, whichever direction the causal arrow runs.
A bootstrapped company usually either has loans (== external investment) or very low startup cost (no investment).
Cases like Ross Perot trying to buy himself the presidency independently are more commonly failures.
