In The Founder’s Dilemmas, Wasserman describes investor dilemmas as a tradeoff between the resources an investor can provide and the risks that come with giving someone else an ownership stake and influence over the business (Wasserman, 2012). This issue stood out to me because securing funding can help a new venture grow much faster, but the founder must carefully consider what they are giving up in exchange.
Outside investors can provide much more than money. Depending on the investor, they may provide industry knowledge, connections, and access to additional resources. Research supports the idea that investors can influence how startups are managed after receiving funding. For example, Butticè, Colombo, and Rovelli (2024) found that venture-backed startups tend to delegate more decision-making authority than startups without venture capital. This demonstrates that accepting investment can change not only a business’s ownership structure but also how important decisions are made.
At the same time, founders should not assume that keeping complete control is always the best outcome. Wasserman’s research on more than 6,000 American startups found that startups in which founders retained control of the board or the CEO position were associated with lower company value than startups in which founders had given up some control (Wasserman, 2015). In one of my recent SME interviews, I interviewed Susan Winter. In our interview, Susan had brought up how important it is to delegate some responsibilities to other employees you hire. Susan also said that, to help with being less attached and give important roles to others, the owner should create production checklists to ensure that other employees are doing tasks the way the owner does. More recent research also shows that entrepreneurs place significant value on maintaining control, meaning that granting investors voting power can entail a substantial personal and financial tradeoff (Ewens et al., 2025).
For my future business idea, I would seek an investor who understands the company’s mission, like the company for what it does for the local community, and can contribute knowledge or connections in addition to capital. The investor relationship should be viewed as a partnership, not simply a source of money.
References
Butticè, V., Colombo, M. G., & Rovelli, P. (2024). Venture Capital and the delegation of decision authority in startups: An exploratory study. Journal of Industrial and Business Economics, 51(4), 893–923. https://doi.org/10.1007/s40812-024-00313-4
Ewens, M. (2025). Private value of entrepreneurial control: Evidence from a discrete choice experiment. The Review of Corporate Finance Studies.
Wasserman, N. (2012). The founder’s dilemmas: Anticipating and avoiding the pitfalls that can sink a startup. Princeton University Press.
Wasserman, N. (2015). The throne vs. the kingdom: Founder control and value creation in startups. Strategic Management Journal, 38(2), 255–277.
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