Pre-Money Valuation vs Number of Founders

Here’s a chart of the day worth sharing.  I was working on some data analysis around the topic of angel round pre-money valuations (which I’ll post soon) and came up with the following interesting charts.  The first chart shows the average pre-money valuation for the first round of US technology companies founded in the last 5 years, provided said round was between one and two million dollars.  It is a pretty narrow filter of the 750+ companies that completed the 2010 CompStudy survey, but there are 55 rounds of financing to look at…enough to be a meaningful dataset I think.

What is interesting is that you see a peak pre-money valuation of $3.16 million with two company founders, which is higher than companies with any other number of founders.

Pre-Money Valuation vs. Number of Founders

If you just looked at this chart, you might come to the conclusion that two founders is the ideal.  After all that fits the anecdotal model of Jobs/Wozniak, Gates/Allen, Page/Brin, etc.  But if you look at the following chart (pre-money valuation per founder), you see that the “marginal value of an additional founder” decreases substantially.

Pre-Money Valuation Per Founder

This chart shows that adding additional founders to the team is in fact dilutive, but also that the more founders the more dilutive.

I once heard a company co-founder say that, “the biggest dilution I ever took was bringing on a co-founder.”  But more often I hear the opposite of how having a co-founder helps balance the team emotionally as well as in terms of skill sets.

Personally I’ve done it both ways (solo as well as with one or more co-founders) and I think the “safety-in-numbers” theory is more typical with first time entrepreneurs than with serial entrepreneurs.  Again, anecdotal though.

So, I’m curious. What is your take?  Is the dilution of co-founders counterbalanced by other factors? Is it worth it or not?