Most Seed VC's are investing in a Team and an Idea.
"Founder" as a singular rarely get investments. No man is an island, and you don't want your investment to get hit by a bus.
"Founder" as a singular rarely get investments. No man is an island, and you don't want your investment to get hit by a bus.
So take out life insurance on the founder.
And if two founders are essential for a successful startup, then there is actually twice as much chance of it failing by one of them being hit by a bus.
You can only insure for the amount of your investment, that offsets the risk but doesn't cover your gains. Also since the cost to do so is 1/10th of your investment over 3 years, you would typically not opt for the coverage. I don't know of an investor who does.
There is also a belief that no one guy is "that smart" that anything 1 person can build has any competitive advantage.
However, taking this as a given doesn't strike me as right as founders can definitely get to some sort of market traction on their own and hire people to fill in their deficiencies. It also strikes me as odd that while Dropbox is one of YC's biggest hits they still hang on to this 2-founders doctrine.
I can't help but think that not investing in single founders is caused by the social signalling involved of single individuals. The reasoning would be "If you can't convince somebody else to join you, why would I invest my money in you?".
Another genuine concern would be that this individual would have to have mastered a broad set of skills to run a successful business independently and such people are unicorns.