Is it feasible to tell an investor that you will quit your job and work full time at a startup, if you get the funding?

Updated on : January 21, 2022 by Christopher Foster



Is it feasible to tell an investor that you will quit your job and work full time at a startup, if you get the funding?

For many investors, it will not go well. I know this from personal experience. Our startup just received a rejection from an investor who was wondering why I, as a co-founder, had not quit my regular job. Some investors feel that it is necessary to run a startup 80 hours a week for it to be successful. I don't necessarily agree with this, but many think so. These types of investors will not be willing to invest in "moonlighting co-founders."

However, there are other types of investors who will not mind this. Investors are as varied as the companies they invest in.

My advice: I agree with Sramana Mitra: For m

Keep reading

For many investors, it will not go well. I know this from personal experience. Our startup just received a rejection from an investor who was wondering why I, as a co-founder, had not quit my regular job. Some investors feel that it is necessary to run a startup 80 hours a week for it to be successful. I don't necessarily agree with this, but many think so. These types of investors will not be willing to invest in "moonlighting co-founders."

However, there are other types of investors who will not mind this. Investors are as varied as the companies they invest in.

My advice: I agree with Sramana Mitra: For me, with my temperament and level of risk tolerance, bootstrapping / moonlighting is the way to go. It's what I feel most comfortable with. I have a mortgage, a family, and a well-paying job. It means: I have people who depend on me for health insurance, car insurance, life insurance, home insurance. All of these things are more complicated when you are self-employed.

I run a web startup, with no office, no employees, and very little overhead. I took Tim Ferriss's principle of automation seriously. I created a startup that is 90% automated so it doesn't require a lot of time, manpower, or resources to run. The registration process is automated. The application runs in an automated way.

So why not have the best of both worlds? In fact, Marci Alboher's book, "One Person, Multiple Careers," actually gave me permission to be an illuminator and agree to it. Moonlighting is not equivalent to "you lack commitment." Sometimes it means that you are being cautious.

I don't believe in this "all or nothing" kind of thinking. "It is good to hold on to one thing and not let go of the other", Ecclesiastes 7:18. This all-or-nothing thinking is part of what led our economy to near collapse.

Remember, investors' money is not income. It is capital, intended to increase business income and customers. One of the problems with today's startup / investor culture is treating investment as income or income.

Startups are using hundreds of thousands of dollars, even millions of dollars, in startup funds to pay salaries and overhead for a company that is not even creditworthy, has no customers or real income. In my opinion, this is unsustainable.

A company will need customers and income to be able to make any investment it requires. Period. By taking investors' money before the business model is tested, all you are doing is postponing the inevitable disaster. And this is what startup founders are doing, precisely because they see investing as the end and treat investors' money as income or income.

So the bottom line is: you need to find investors who align with your vision on entrepreneurship. In my experience, partnering with an investor who has different ideas of what startup life or entrepreneurship is like can spell trouble.

It is often okay if one or more team members are waiting for funds to quit their day jobs. Investors understand the financial reality that not everyone has independent resources.

This presents three challenges to overcome:

  • If the person is a critical member of the team, convincing the investor that they will, in fact, quit their job, rather than having cold feet at the last minute or being on the launch pad just to show it off. This could be handled by making it a closing condition, although this will delay and complicate the deal a bit. If the person is not critical to the business, he must pr
Keep reading

It is often okay if one or more team members are waiting for funds to quit their day jobs. Investors understand the financial reality that not everyone has independent resources.

This presents three challenges to overcome:

  • If the person is a critical member of the team, convincing the investor that they will, in fact, quit their job, rather than having cold feet at the last minute or being on the launch pad just to show it off. This could be handled by making it a closing condition, although this will delay and complicate the deal a bit. If the person is not critical to the business, they should probably stay in their day job.
  • Build the product, organize the organization and demonstrate customer interest or sales without having to dedicate full time. Most investors will not fund unless this is in place, and there is a lot to do even if everyone works more full time.
  • Proving that it is a good team. Unless you've burned your organization down by working closely with your team day and night in a fast-paced, stressful environment, you can't be sure that everyone is up to the job. Fitness, dedication, compatibility, personal fit are all difficult to judge except in practice.

If the majority of the team, the CEO in particular, is still in their day jobs, it will be difficult to get funding, not necessarily because of job obligations, but because the company probably hasn't developed enough substance to be bankable.

Keep in mind that in everything but the early stage and F&F, the company's plans to make full-time job offers to newly hired employees is precisely what investors are funding.

I do not believe it. You have to start while you have a job. It's perfectly okay, by the way, to start a business with a paycheck and then quit when you have enough validation. At One Million by One Million we encourage entrepreneurs to keep the paycheck and stick with the program, line up all the ducks and THEN quit the job.

Most angel investors will not be willing to fund something like this. You need to understand that Angel investors are betting on the rider and not the horse, and an entrepreneur who doesn't show enough commitment by demonstrating passion and self-belief would be a huge red flag. That said, many will be willing to consider this when looking at the entrepreneur's risk profile. This is all of course if you have no income / traction (unlikely but possible)

It depends. Sometimes it is a matter of leap of faith. Taking risks will show your investor that you are serious about your startup, that you want to dedicate your time to it because you know / trust that your startup will get somewhere.

This will reflect badly on you. Why should an investor risk his money in his company if he is not even willing to risk quitting his job for it?

Absolutely good and very common. I think Simon Willison misunderstood the question or misinterprets how investors view bootstrap founders.

I'll add this though: make sure you keep a very clear separation between your work for your current employer and the work you do at your start-up. the agreements do not cover the start-up work product. Best of luck!

As you can see from the diversity of responses, it can be positive or negative. An investor will see your willingness to devote all of your attention to the project, but might wonder why you don't take the leap sooner. Some investors are hesitant to fund salaries. While others are minimal.

I was thrilled when Jeroen agreed to become my co-founder and vice president of engineering. Jeroen was perfect for the position with his strong technical skills combined with his ability to recruit and manage a team.

But we had been raising money for 8 months when Jeroen agreed to join us. Worse still, the Great Recession was just beginning.

It was not clear to me if we would be successful with our fundraiser. The last thing I wanted was blood on my hands.

So I said to Jeroen, “I don't want you to quit your job. There is too much risk.

"Wait until we have funds until I quit."

Your co-founder doesn't have to quit

Keep reading

I was thrilled when Jeroen agreed to become my co-founder and vice president of engineering. Jeroen was perfect for the position with his strong technical skills combined with his ability to recruit and manage a team.

But we had been raising money for 8 months when Jeroen agreed to join us. Worse still, the Great Recession was just beginning.

It was not clear to me if we would be successful with our fundraiser. The last thing I wanted was blood on my hands.

So I said to Jeroen, “I don't want you to quit your job. There is too much risk.

"Wait until we have funds until I quit."

Your co-founder doesn't have to quit his job while you're raising money.

The Great Recession was such a crazy time. You could get meetings, but the climate wasn't exactly conducive to startups.

Now, if there was ever a time when investors were looking for an excuse not to invest, it was the Great Recession. However, I didn't care. If it cost us an investor, so be it.

We were honest with our investors. I told them that Jeroen was still working and that he would be joining the company full time when the funds closed.

Your VP of Engineering or CTO is the critical piece (in addition to you, the CEO) in a technology startup. If Jeroen didn't “show up” well, then we were down.

Fortunately, Jeroen was very good. I could see that Jeroen's combination of technical prowess, professionalism, and excellent communication skills was resonating with potential investors. He attended as many investor meetings as he could. In fact, I don't think she missed a single meeting that I asked her to attend.

But beware of the buyer. Your fundraiser will fall apart if your co-founder doesn't join the company.

Jeroen kept his day job for the following year. When he resigned from Maxim, management pushed the entire court to stay.

They tried everything. They offered him more money. They offered him a promotion. And, of course, since I was also a student of Maxim, they spoke badly to me.

None of that worked. Jeroen quit his job after we signed the term sheet and moved on to the docs. I think we may have waited up to two weeks before closing before he resigned.

I'd be lying if I told you that I'm not worried about Jeroen backing off at the last minute. At the same time, Jeroen was a serious person. Deep down, I knew he wouldn't have stayed if he didn't believe in what we were doing.

That is the key. You are putting the life of your company in the hands of your co-founder if you allow him to continue working his day job while you raise money. Just make sure you know the character of the person you are giving this to.

To learn more, read: What are the 11 Steps You Can Take When a Co-Founder Quits? - Brett J. Fox

Excellent question.

Some may say that you don't want to quit your regular job until you actually start making money from your business. While this may be true for some, it really is up to you.

For me, I prefer to put all the eggs in one basket and focus 100% rather than spreading my energy and concentrating elsewhere.

I started my business with only USD300 and 5 years later I am fine. Well in the sense that I am making more than I could if I look at the money I make compared to what I would have in terms of salary. Consult FloydConsultancy-call center services

The reason why I made it

Keep reading

Excellent question.

Some may say that you don't want to quit your regular job until you actually start making money from your business. While this may be true for some, it really is up to you.

For me, I prefer to put all the eggs in one basket and focus 100% rather than spreading my energy and concentrating elsewhere.

I started my business with only USD300 and 5 years later I am fine. Well in the sense that I am making more than I could if I look at the money I make compared to what I would have in terms of salary. Consult FloydConsultancy-call center services

The reason I succeeded was:

  1. Fear is a good thing: If you don't have a full-time job, of course, you will be under pressure to put food on the table. You will be worried about bankruptcy and so on. When I left my full-time job, I was worried about how I was going to pay my bills. This made me work harder. I failed a few times, but did not give up because I had no other option to turn to. If you have no options and you have a job on hand, you will more than likely give 100%. If you give 100%, you are more likely to win.
  2. Time to Invest: Running a business and actually making something out of nothing takes a lot of time. Significant time is spent learning new trades because at first you'll be a one-man show (unless you're on a big budget). I couldn't have done that with another job on hand.
  3. Business development: You will need to take time for your customers or clients to serve them and build a relationship with them. The more time you have, the more time you can build new ones and nurture old ones.

Having said all that, you still want to go the common path that most people take, or if you are unsure of your business concept, I recommend:

  1. Make a budget - you need to do this anyway. Think about how long it will actually take to start making money and then add 12 more months to it. Save cash accordingly, cut all unnecessary costs, and make living standard concessions whenever possible.
  2. Hire a Freelancer: Hire a freelancer who is just as enthusiastic and entrepreneurial. Remember, you get what you pay for. Most people on land are wrong with this theory. They think they should get someone to work for them at a very low cost. Obviously, it will cost you less comparatively, but compare it to hiring someone with similar years of in-house experience, what you would have paid. Negotiate, but not so much so that the freelancer jumps to another project when they get a better deal. Remember that loyalty also costs you.

Last but not least, a coach is very important for people to be successful.

Check out this list of things to do before starting a business

Try to find one. I hope this helps. Feel free to reach out if you need help.

I was in a very similar situation when I started Gillware Data Recovery. He was a successful software architect with a healthy six-figure salary, but he was bored with software and did not enjoy having bosses.

At first I worked 40 hours in consulting and then another 40 hours in the side business. I'm a bit of a workaholic so that wasn't a big deal. The 40 hours in the side business never felt like a job, it still doesn't.

I was lucky that when I wrote / designed software for large companies, I did it as a consultant. I was twice lucky to be well above average.

Keep reading

I was in a very similar situation when I started Gillware Data Recovery. He was a successful software architect with a healthy six-figure salary, but he was bored with software and did not enjoy having bosses.

At first I worked 40 hours in consulting and then another 40 hours in the side business. I'm a bit of a workaholic so that wasn't a big deal. The 40 hours in the side business never felt like a job, it still doesn't.

I was lucky that when I wrote / designed software for large companies, I did it as a consultant. I was twice as lucky to be well above average in that profession and to be able to perform the normal tasks of a 40 hour consultant in about 15 yo-hours. So I worked it out with my managers and worked less and less over time, until finally it didn't even make sense to work those 15 hours. This was to the chagrin of my IT pimp who was losing money on my stupid non-40 hour antics.

It is worth noting that I have never paid myself a CEO salary that is equivalent to what I earned as a software mercenary. More money to me means less happy employees or fewer employees doing all the fun things I want them to do. It is also worth noting that he was not married and had no dependents. If I'm honest with myself, I'm pretty sure I wouldn't be able to do it again, or at least not until my kids are off to college.

We are on this planet once. If taking risks and being your own boss is important and you feel driven to do these things, skip. This is the hardest part to analyze because you need to be truly honest about your personality and what makes you happy. Most people are not so happy at work, or at least they are much happier on the weekends. Those same people enjoy weekends and free time more because they can't really think about work at all and are only concentrating on their hobbies / friends / family. When you and your family's income come 100% from your own business, you can't turn it off, you'll think about it all the time, possibly even in your dreams. I used to dream of hard drives all the time. Sad. But for me everything is worth it.

I can tell you that I will never have a job where an old man with a stupid mustache with 40 IQ points less than me tells me what to do. Even if he's a perfectly nice man with a well-groomed mustache, that pays me an exorbitant salary. While I have never been considered a maverick, I know for a fact that if I ever need to, I can put together a winning team to tackle almost any industry. Trust has been earned by doing it more than once.

Ultimately, listen to your instincts. If that drive toward daily work dreads you, and if you start spending more and more time looking at your watch and thinking about your other job, it's time to move on.

Other Guides:


GET SPECIAL OFFER FROM OUR PARTNER.