Investor Talk: How many existing investors puts you off a startup?


Being able to demonstrate existing support and commitment from investors is a powerful tool for any startup seeking investment.  Proof of other people willing to put money behind the venture, as well as the skills and experience brought by investors, can add significant value to an investment proposition. But can having existing investors on board swing things the other way? Disrupt Africa asks four investors how many existing investors backing a startup would put them off getting involved.

Andrea Bohmert, partner at Knife Capital:

“Anything more than five would concern me. The biggest problem would be if there are many shareholders who own less than 1 per cent, but there is very clear shareholder agreement that governs voting rights or warranties before an exit. A bad investor, even with the smallest of equity stakes, can cause significant harm in any transaction.”

Oliver Drews, chief executive officer (CEO) of Clifftop Colony Capital Partners:

“In terms of existing investors, I suppose it depends very much which stage the company is at and the quality of the individual investors. At the seed stage it is good if the entrepreneurial team can demonstrate serious skin in the game but there is a limit to the value of founder participation and third party capital to verify the business model actually becomes very valuable for future fundraising. So it is important to get that balance right. At an early stage especially, it is good if one can demonstrate involvement from third parties as opposed to a wash list of passive names. It seems to me that two to five third party investors is ideal for this purpose.”

Brett Commaille, co-founder and lead partner at AngelHub Ventures:

“It really depends on the stage of the business and how much equity the founder has left.  What’s important for me is:

1) the investors are not in a difficult-to-manage structure – you don’t want a process that hinders or prevents decisions;

2) the founders need to still have sufficient equity to be incentivised to drive the business;

3) ideally the investors are willing to assist with their networks in growing the business.

If there are however more than 10 investors, I prefer them to be in an investment company structure that has a representative whom the entrepreneur and other shareholders can deal with.  It just makes the admin easier.”

Dan Guasco, co-founder at Team Africa Ventures:

“We are very happy to co-invest, in fact we believe that the more experience that comes into a startup the better, so we have no limitation on number of investors provided we have a common set of deal terms and elected representative.”


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Inspired and excited by the African tech entrepreneurial scene, Gabriella spends her time travelling around the continent to report on the most innovative tech startups, the most active investors, and the latest trends emerging in the ecosystem.

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