The One Who Can Raise Money is the Ceo

One of the main questions I always get from proto-startups is who should get what title, which is really startup code for, โ€œWhich one of us should be CEO?โ€

Firstly, if a natural leader doesnโ€™t appear within the group, that is a big red flag. You need someone who can make the tough calls, who can get screamed at by board members without wavering in his or her belief in the companyโ€™s trajectory, who can fire a poisonous employee even if it is that employeeโ€™s birthday and their dog just died.

Many founders want to be CEO in the early stage. They think itโ€™s glamorous. Itโ€™s not.

The fact is, the only one who can raise money is the CEO. Full stop.

Seed money comes from wealthy individuals, and wealthy individuals write checks to CEOs, not CTOs or COOs.

Similarly, if a founder dubs themselves CEO but then fails to raise money, change their role or cut them loose. You wouldnโ€™t believe how many times Iโ€™ve heard some joker tell me heโ€™s CEO because it was his โ€œidea.โ€

Besides the fact that ideas are worthless, the primary role of the early stage CEO is to raise money. There is no reason to have new ideas until youโ€™ve executed a prototype of the first idea, generated revenue/users/some other key metric off of that prototype, and then raised seed money.

If your CEO is the โ€œidea guyโ€ (a.k.a. โ€œbig picture guyโ€, a.k.a. โ€œthe guy who brings in an expensive CFO advisor to help him raise fundsโ€), that is a major red flag to investors. In an early-stage startup, everyone has to wear many hats.

The CTO will be doing front-end development, back-end development and QA. The CEO should be working on sales, marketing and the product, but most of all, they should be doing the fundraising. If your CEO cannot raise money, then that person isnโ€™t a real startup CEO.

Bottom line: The one who can raise money should be the CEO.

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