"If I were running Clearbanc alone, he would probably have left the cliff eight times at this time, "says Clearbanc co-founder Andrew D’Souza.
"If I ran the company alone, it would be half its size," adds Michele Romanow, the other co-founder of Clearbanc.
In addition to starting the $ 420 million-backed fintech company together, D’Souza and Romanow are in a relationship.
The two initially met at an event in San Francisco, and followed up with a friendly informative interview at a Mexican restaurant. D’Souza's fundraising experience was an attraction for Romanow, who at the time was looking for information on how to raise money for his startup. Romanow ended up selling his company to Groupon, but his conversation with D’Souza helped anchor the valuation. It was also the beginning of a relationship.
When they started dating in 2014, they exchanged war stories about business creation. His connection depended on this initial coincidence: D’Souza had raised funds for all of his businesses, while Romanow had caught up. It was from these conversations that they created Clearbanc, the Canadian-based venture capital firm that specializes in undiluted revenue sharing agreements for new businesses.
The new companies with co-founders by the helm are scoring large rounds of financing and leaving the companies. Julia and Kevin Hartz co-founded Eventbrite, which was made public on the New York Stock Exchange in 2018. Married couple Diane Greene and Mendel Rosenblum were on the VMWare co-founder team, which they sold to Dell in 2015. The link in a relationship can be a secret weapon in the creation of companies for new technology companies, but that does not come without risks such as the lack of harmony of the co-founder, the majority of equity and even divorce.
"Just hang up the phone."
Talk to anyone with a co-founder title in a startup and you will find a trend: free time is almost non-existent. Couples who run a business together say it is advantageous to be in the same work cycle. "When you work in the same business, you are at the same rate as when things are exploding," says Romanow. “Then I know exactly why Andrew is on his phone. I know that if he doesn't do this, I'll have to do it. "
NEXT The Trucking co-founders Lidia Yan and Elton Chung have raised a total of $ 125 million for their logistics start, including a $ 97 million from the C Series of Brookfield and Sequoia. The couple says that the company is a presence that is fully integrated into their lives and their relationship at all times. While that can be excellent for a business, it is not always good for your marriage. “We got in a moment to talk about work all the time. Not only in the office but also at home, "says Yan. The solution is a simple rule imposed by an iPhone alarm. All work-related talks should cease after 8 p.m. Every day after Sounds the alarm They also use free time on weekends to go to restaurants in Los Angeles, one of their shared passions.
Couples of co-founders say that if you are expanding a company, you will have to accept putting other life decisions on hold, such as going on a honeymoon or having children.
Leslie Voorhees and Calley Means got married in 2016, but they still haven't left for their honeymoon. Co-founder of Anomalie, a wedding dress customization startup that has raised $ 13 million. Instead of going on vacation to Bora Bora the day after their wedding, the newly married founders got on a plane to China, where Leslie stayed for a couple of months to establish the Anomalie supply chain. The couple admits that even now, they don't make time for their personal lives.
“We have not spent more than an hour of our entire marriage without talking about wedding dresses. It is not necessarily the healthiest, but we have enjoyed obsessing with wedding dresses every day, "says Leslie.
His skills complement each other: Calley's superpower is that he can move fast, while Leslie is more methodical and good at establishing the structure. While they say that being a co-founding couple has strengthened their bond, they are working to set limits. Being a founder means that you have to sacrifice other areas of your life for the company.
"Once we raise the D Series, we will start thinking about having children," jokes Calley, in what may not really be a joke.
Investors are warming up with married co-founders
Clearbanc wants to make it easier and faster for new companies to increase growth capital. Your 20-minute terms sheet product is intended to help founders raise money in 20 minutes, instead of the traditional 3 to 6 month process it usually takes. But how did investors react to the relationship status of Clearbanc cofounders? Not well, at the beginning.
A Clearbanc investor passed in an early round, explaining to D & # 39; Souza and Romanow that they would have backed them individually, but that they were worried about supporting them as a couple, especially because they had only been dating for a year at that time. point.
"The same investor ended up coming in two rounds later at a hundred times the valuation," says D’Souza. This, they felt, showed that the fear of investing in a partner was a false sense of increased risk.
It seems that investors today agree. When the married co-founders of Apli, an on-demand recruiting platform based in Mexico, entered the ALLVP office, the fund was not entirely sure what it meant to invest in a company run by a married couple.
The founders Vera and José met while studying together at Harvard Business School before working in two separate Internet Rocket companies in Mexico and founding Apli. The business model, the adjustment of the product market and the potential impact for the company were typical factors that the fund reflected before issuing a check, but ALLVP also considered the marital status of the founders.
"After an argument, we decided to analyze the team like any other founding team," says ALLVP partner Federico Antoni. In addition to the obvious personal chemistry, there was a professional chemistry between Vera and José. “We weigh the risk of divorce and decide to take it. We won a team totally invested in the company and one that could balance the personal life and life of the startup. "
Equity could pose another risk factor. Investors could distrust the founding couples depending on the capital structure. If their finances are combined, a couple of co-founders could own a large majority of a startup. Let's say that two unmarried founders owned 20% of a company: a co-founding couple whose finances are united would own 40%. Given this logic, the VCs would inherently have more bargaining power if the founders are not financially linked.
However, the VCs with whom I spoke did not necessarily agree with that logic.
"The only thing that matters to me with equity is if the founders have enough," says David Ulevitch, general partner of Andreessen Horowitz. "Venture capital investments are inherently minority investments, so it really is about ensuring that founders are motivated and rewarded for building something durable."
But what happens when the dual identities of co-founder and spouse do not work?
Divorce will not necessarily be the disappearance of a startup
Sara and Josh Margulis founded Honeyfund, a honeymoon registration site, in 2006. The married couple appeared in Shark Tank in 2015, earning an investment from Kevin O'Leary. Sara says Honeyfund is different from new popular wedding companies like Zola and The Knot, since the main product is a crowdfunding platform that allows newly engaged couples to organize the financing of weddings and honeymoons.
When Sara and Josh divorced in 2019, the first instinct was to sell the company. However, "the more we parted professionally, the more opportunities I saw to organize the team the way I wanted and push the priorities I wanted," says Sara. Finally, Sara decided that she would buy her ex-husband from the company and continue on a new career as CEO.
"If we hadn't been working together, our separation process would have been different. There were truths that needed to be said that were emotionally difficult in a marriage, that I didn't want to put Josh in the middle of a great launch of a Target association."
The genesis of his business was based on his own experience as a married couple. They gained the affection of sharks, which operate in a $ 72 billion industry that depends on the commodification of love and lasting marriage. But the honeymoon phase cannot last forever. Up to 50% of married couples in the United States will be divided, according to the American Psychological Association.
Now, Margulis' experience of divorcing his co-founder is to inform about new products and a marketing strategy while continuing to iterate at the beginning.
After the divorce, Margulis has been working on a strategy focused on Honeyfund content that will include a book and a podcast focused on the idea of how couples can successfully navigate marriages. She is getting 14 years of Honeyfund couples to be interviewed, along with the research of psychologists and marriage experts to help couples avoid the fatality they went through.
Co-founder couples are the first to eagerly point to an obvious advantage. Aligned passions, equal motivation, complementary skill sets and industry experience are a basis for any co-founder, married or unmarried relationship. But being married to your co-founder includes unique challenges such as time management and setting limits in the boardroom and bedroom.
"Co-founder disputes are the leading cause of initial death, but it doesn't have to be that way," writes Garry Tan, managing partner of Initialized Capital and former partner of Y Combinator.
Co-founders are not always aligned with the company's big decisions. Is remote work allowed? Who do we accept funds from and how do we deploy capital? Who do we hire for a key executive position?
There are many things to fight for when there is a lot at stake and the careers of your employees are at risk. And the co-founder's lack of harmony has been a key reason why many startups stagger. But being proactive about conflict management instead of avoiding it is key, as is knowing when to get professional help from an executive coach or therapist. This could help early stage companies recalibrate and dodge the turmoil.
If this line of reasoning is maintained, co-founder couples may have an advantage because they already have communication tools integrated into their relationship.
Ulevitch says that for him, couples as co-founders It is not a detour.
“Many cofounder teams fall apart, and it's often not knowing each other very well, especially when things get tough. Couples really solve that aspect very well. ” The founders certainly support this claim.
"One of the company's values is to disagree and compromise," says Lidia of NEXT Trucking. In what she describes as a rare occasion when executives are not aligned with a decision, she says a vote will be taken, and then the entire team will commit to the final decision. To mitigate risk, the founders say it is key to have well-defined job descriptions. Stay in your area and, as partners, you should already trust each other in what each person specializes.
Being married to your co-founder is a secret weapon, according to Helena Price Hambrecht and Woody Hambrecht.
Helena and Woody met during the pre-slip era at OKCupid in 2012. “I had just joined the online dating space and I saw this great farmer. We were a 96% match, so I sent her a message, ”says Helena about how she first connected with her future husband.
"I literally thought someone was killing me," Woody thought as he read Helena's message. "There is no way for this person to write to me. It took me three or four times to answer because I wasn't sure if she was a real person."
After a while, the two met at a dive bar in the San Francisco Richmond neighborhood on a date that culminated in drinking 40 and watching rap videos on their phones in the park. "It's a bit difficult to explain, but it was very easy. We knew we would meet for the rest of our lives. Maybe as friends, maybe more, we didn't know." They remained friends for four years and got married in 2018.
Haus's genesis was a combination of the founders' background, and the brand of direct consumer snacks just got a $ 4.5 million seed round. Woody owned a wine and snack brand, but he felt he wasn't having a big enough impact. Helena, a Silicon Valley production and brand veteran, felt that Generation Z no longer wanted to get drunk and that millennials are tired of mandatory and expensive happy hours. When deciding where to put their money, younger consumers are thinking about their bodies, brand image, transparency, sustainability and authenticity.
Helena wondered why the same standards do not apply to an industry as large as liquor. Why wasn't there a Glossier or Everlane of alcohol? She felt that while there is a massive opportunity with all these changing consumer trends, no one can make a direct alcohol brand to the consumer. Haus was born from what the founders say was a magical "techie married a winemaker" moment. Woody knew of a legal loophole that could allow the couple to build the Alcohol Glossier.
"There is this small splinter in the realm of snacks, where if a drink is made mainly of grapes and has less than 24% alcohol, it can be classified as wine and sold DTC," explains Helena. They had that idea when they had a three month old baby. "We don't have time to do this, but we have to do it because it is the best idea we will have in our lives," she says.
“We have a toolkit. We are married. If we have a disagreement about something, we will resolve it because we are married. Our skill sets are so clearly defined that there isn't much friction. For us it is this great balance where we have two totally separate fields of experience, "says Helena.
Woody and Helena have another secret weapon. They work with a business coach with experience in psychotherapy and believe that all co-founders should go to therapy together, because it is always deeper than just business.
Roni and Oren Frank of Talkspace would agree. His trip to the world of mental health began from a crisis in his own relationship.
"Our marriage was falling apart, and we finally decided to give it one last chance in couple therapy." It was the first time any of them experienced therapy. He taught them how to communicate better, read and support each other better. He gave them tools to handle the conflict.
The therapy inspired Roni to abandon her career as a software developer and return to graduate school to study psychology. While studying, she says she was exposed to how broken the mental health system is in the United States.
Roni says the research showed that 25% of Americans suffer from mental health complications, however, two-thirds of that group do not have access to mental health care. The two founders felt passion for solving this problem based on how instrumental therapy was in the rescue of their own marriage. They decided to launch a platform that allows patients and therapists to communicate online.
Talkspace, which wants to open access to mental health, has now raised $ 110 million, most recently a $ 50 million Series D. The product idea for the company was an integral part of the relationship, and the company now has more than 100 employees. But when Talkspace was a young startup of 10 people, it was much harder. Roni points out that the co-founder relationship caused extreme anxiety.
"I didn't sleep well, I didn't eat well and I experienced exhaustion." She says she had to force herself to set limits when it comes to being consumed by work. However, in general, his experience has been that sharing a mission and a goal strengthens marriage, a healthy inverse.
Co-founder couples are excited about the experience of running a business with their spouse. There is no doubt that these companies are developing patented products, executing winning marketing strategies and generating large rounds and outputs.
The dynamics of the married co-founder seems to be excellent for business, but time will tell if it works just as well for marriages.