"If I was If I left Clearbanc alone, it would have fallen off the cliff eight times at that point, ”said Andrew D’Souza, co-founder of Clearbanc.
"If I ran the company alone, it would be half the size," added Michele Romanow, the other co-founder of Clearbanc.
D’Souza and Romanow are not only founding the $ 420 million fintech company, but are also in a relationship.
The two first met at an event in San Francisco and then conducted a friendly information interview in a Mexican restaurant. D’Souza's fundraising experience was a win for Romanow, who was then looking for information on how to raise money for her startup. Romanow eventually sold her company to Groupon, but her conversation with D’Souza helped anchor the rating. It was also the beginning of a relationship.
When they started dating in 2014, they shared war stories about building businesses. Their connection depended on this initial commonality – D’Souza had funded all of his business while Romanow was booting. From these talks emerged Clearbanc, the Canadian-based VC company that specializes in non-dilutive revenue sharing agreements for startups.
Startups with coupled co-founders lead large rounds of financing and leave companies. Julia and Kevin Hartz founded Eventbrite, The married couple Diane Greene and Mendel Rosenblum were part of the VMware co-founder team, which was sold to Dell in 2015. Tying a relationship could be a secret weapon in building a business New Wave Tech startups, but that's not without risks, such as disharmony from the co-founders, super-majority stocks, and even divorce.
"Just hang up the phone."
If you talk to a co-founder at a startup, you will notice a trend: there is almost no free time. Couples who run a company together say that working on the same working day is beneficial. "When you work in the same store, you have the same cadence as when you exploded," Romanow says. "So I know exactly why Andrew is on his phone. I know if he doesn't, I have to. "
The co-founders of NEXT Trucking, Lidia Yan and Elton Chung, raised a total of $ 125 million for their logistics startup, including a $ 97 million Series C from Brookfield and Sequoia, The couple says the company is a presence that is fully integrated into their lives and relationships at all times. While this may be great for a company, it's not always great for their marriage. “We talked about work all the time. Not just in the office, but also at home, ”says Yan. The solution is a simple rule enforced by an iPhone alarm. All work-related calls must be interrupted every day after the alarm after 8 p.m. On weekends, they also use their free time to go out to restaurants in LA, one of their shared passions.
Co-founder couples say that when you scale a business, you have to agree to put other life decisions on hold, e.g. B. Spending your honeymoon or having children.
Leslie Voorhees and Calley Means were married in 2016 but haven't had a honeymoon yet. They were the co-founders of Anomaly, a wedding dress customization startup that raised $ 13 million. Instead of going on vacation to Bora Bora the day after their wedding, the newlywed founders boarded a plane to China, where Leslie stayed a few months to build the anomaly supply chain. The couple admits that they still don't take time for their personal lives.
“We haven't spent more than an hour of our entire marriage not talking about wedding dresses. It's not necessarily the healthiest thing, but we enjoyed being obsessed with wedding dresses every day, ”says Leslie.
Their skills complement each other: Calley's superpower is that it can move quickly, while Leslie is more methodical and better at building structures. While they say that a couple of co-founders have strengthened their bond, they're working to set limits. Being a founder means that you have to sacrifice other areas of your life for the company.
"As soon as we increase Serie D, we'll think about having children," jokes Calley – which is actually not a joke.
Investors are warming up for married co-founders
Clearbanc wants to make it easier and faster for startups to raise growth capital. Their 20-minute term sheet product is designed to help founders raise money in 20 minutes, instead of the traditional 3 to 6 months that the process typically takes. But how did investors react to the relationship status of Clearbanc's co-founders? Not good at first.
A Clearbanc investor passed on an early round, explaining to D & # 39; Souza and Romanow that they had both supported individually but were concerned about supporting them as a couple, especially since they had only been together for a year at this point.
"The same investor came 100 times the valuation two rounds later," said D’Souza. This proved that the fear of investing in a couple was a false sense of increased risk.
It seems investors are agreeing today. When the married co-founders of Apli, a Mexico-based on-demand recruitment platform, entered ALLVP's office, the fund wasn't entirely sure what it meant to invest in a couple-owned company.
Founders Vera and Jose met while studying at Harvard Business School before working at two different Rocket Internet companies in Mexico and founding Apli. The business model, product market adjustment, and the potential impact on the company were typical factors that the fund considered before issuing a check. However, ALLVP also took into account the marriage status of the founders.
"After a few discussions, 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 Jose. “We weighed the risk of divorce and decided to take it. We have won a team that is fully invested in the company and that can balance private life and startup life. "
Equity could be another risk factor. Depending on the stock structure, investors could be careful with founding couples. If their finances are combined, a co-founder couple could own a majority of a startup. Suppose two unmarried founders owned 20% of a business – a co-founder couple whose finances are linked would own 40%. Given this logic, VCs would inherently have more bargaining power if the founders weren't financially linked.
VCs I spoke to didn't necessarily agree with this logic.
"For me, justice is only important if the founders have enough," says David Ulevitch, General Partner of Andreessen Horowitz. "Venture capital investment is inherently a minority stake, so it's just a matter of ensuring that founders are motivated and rewarded to build something permanent."
But what happens if the dual identity of co-founder and spouse doesn't work?
Divorce is not necessarily a startup's downfall
Sara and Josh Margulis founded Honeyfund, a honeymoon registration website, in 2006. The then married couple appeared on Shark Tank in 2015 and won an investment from Kevin O’Leary. According to Sara, Honeyfund differs from popular wedding startups like Zola and The Knot in that the core product is a crowdfunding platform that newly engaged couples can use to organize wedding and honeymoon financing.
When Sara and Josh got divorced in 2019, the first instinct was to sell the company. "The more we separated professionally, the more opportunities I saw to organize the team the way I wanted to and to set the priorities that I wanted," says Sara. Ultimately, Sara decided to buy her ex-husband from the company and take a new path as CEO.
“If we hadn't worked together, our separation process would have been different. There were truths that needed to be spoken, that were emotionally difficult in a marriage, and that I didn't want to attract Josh in the middle of a big Target partnership start. "
The birth of their business was rooted in their own experience as a couple. They had gained the affection of Sharks, who worked in a $ 72 billion industry that relies on the commercialization of love and lasting marriage. But the honeymoon phase cannot last forever. Up to 50% of married couples in the United States will separate. according to the American Psychological Association,
Now Margulis’s experience of divorcing her co-founder provides information about new products and a marketing strategy as she continues through her startup.
After the divorce, Margulis worked at Honeyfund on a content-based strategy that included a book and podcast that deal with the idea of how couples can successfully navigate marriages. She sources 14-year-old Honeyfund couples to be interviewed and does research by psychologists and marriage experts to help couples avoid the fate that she's been through.
The secret weapon
Co-founder couples are the first to eagerly point out an obvious advantage. Aligned passions, equal motivation, complementary skills and industry experience are the basis for any cofounder relationship, whether married or unmarried. However, marriage to your co-founder involves unique challenges such as time management and setting boundaries in the boardroom and bedroom.
"Co-founder disputes are number one among early start-up killers, but it doesn't have to be that way," writes Garry Tan, managing partner at Initialized Capital and former Y Combinator partner.
Co-founders are not always geared towards making big decisions in the company. Is distance working allowed? Who do we accept funding from and how do we use capital? Who do we hire for an important leadership role?
There are many things to fight when the stakes are high and your employees' careers are at risk. And disharmony among the co-founders was one of the main reasons why many startups falter. However, it's important to be proactive in dealing with conflict management rather than avoiding it – as is knowing when to get professional help from an executive coach or therapist. This could help early stage companies to recalibrate and avoid turbulence.
If this reasoning is correct, co-founder couples can have an advantage because they already have integrated means of communication in their relationship.
Ulevitch says that for him, couples as a co-founder is not a switch off.
"Many of the co-founder teams are falling apart, and it is often the case that you don't really know each other well, especially when it gets difficult. Couples actually solve this aspect well." The founders certainly support this claim.
"One of the corporate values is to disagree and commit," said Lidia Yan from NEXT Trucking. In what she describes as a rare situation where managers are not focused on making a decision, she says that a vote will take place and then all teams will commit to making the final decision. To minimize the risk, founders say that it is important to have well-defined job descriptions. Stay in your zone and because you are a partner, you should already trust each other in what each person specializes in.
According to Helena Price Hambrecht and Woody Hambrecht, marriage to your co-founder is a secret weapon.
Helena and Woody met on OkCupid during the pre-swipe era in 2012. “I just joined the online dating area and saw this hot farmer guy. We agreed to 96%, so I wrote to him, ”says Helena, how she first connected with her future husband.
"I literally thought someone was fishing for me," Woody thought as he read Helena's message. "No way did this person write to me. It took me three or four times to write it back because I wasn't sure if she was a real person."
After some back and forth, the two met in a pub in the San Francisco Richmond neighborhood on a day drinking 40s and watching rap videos on their cell phones in the park. "It's hard to explain, but it was just that simple. We knew we would get to know each other for the rest of our lives. Maybe as friends, maybe more, we didn't know." They remained friends for four years and married in 2018 ,
The emergence of home was a combination of the founders' backgrounds, and the aperitif brand, which was sold directly to consumers, just hit a $ 4.5 million starting round, Woody had a wine and aperitif brand, but felt that he didn't look big enough. Helena, a Silicon Valley brand and production veteran, felt that Gen Z didn't want to get drunk anymore, and millennials are tired of the mandatory, expensive happy hours. When deciding where to invest their money, younger consumers think about their bodies, their brand image, their transparency, sustainability and authenticity.
Helena wondered why the same standards don't apply to a large industry as to spirits. Why was there no glossier or Everlane with alcohol? She believed that while all of these changing consumer trends offer a tremendous opportunity, no one can make a direct-to-consumer alcohol brand. Haus was born from a magical moment when the founders said a techie married a winemaker. Woody knew of a legal loophole that could allow the couple to build the Glossier of Alcohol.
"There is this tiny bit in the aperitif area. If a drink consists mainly of grapes and contains less than 24% alcohol, it can be classified as a wine and sold as a DTC," explains Helena. They had this idea when they had a three month old baby. "We don't have time for it, but we have to do it because it's the best idea we'll ever have in our lives," she says.
"We have a tool set. We are married. If we do not agree on something, we will resolve it because we are married. Our skills are so clearly defined that there is not much friction. For us it is this cool balance in which we have two completely separate specialist warehouses, ”notes Helena.
Woody and Helena have another secret weapon. You work with a business coach who has a background in psychotherapy and believe that all co-founders should go to therapy together because it always goes deeper than just business.
Roni and Oren Frank from Talkspace would agree. Her journey into the world of mental health started with a crisis in her own relationship.
"Our marriage broke down and we finally decided to give her one last chance in couples therapy." It was the first time that one of them underwent therapy. It taught them how to communicate better, read each other and support each other better. It gave them tools to deal with conflicts.
Therapy inspired Roni to leave her career as a software developer and return to graduate school to study psychology. While studying, she said she was exposed to how broken the mental health system in America was.
According to Roni, 25% of Americans suffer from psychological complications, but two thirds of this bucket have no access to mental health care. The two founders were both passionately interested in solving this problem based on how instrumental therapy helped save their own marriage. They decided to launch a platform where patients and therapists can communicate online.
Talkspace, which aims to provide access to psychiatric care, has now raised $ 110 million, most recently a $ 50 million Series D., The product idea for the company was an integral part of the business relationship, and the company now employs more than 100 people. But when Talkspace was a young startup with 10 people, it was much more difficult. Roni notes that the cofounder relationship created extreme fear.
"I didn't sleep well, I didn't eat well and I had burnout." She says she had to force herself to set limits when it comes to being busy. Overall, however, she has found that sharing a mission and a goal strengthens marriage, a healthy reversal.
Co-founder couples rave about the experience of doing business with their spouse. There is no doubt that these companies develop proprietary products, pursue successful marketing strategies and generate large rounds and exits.
The dynamic of the married co-founder seems great for the business, but time will tell if it works just as well for marriages.