Founder Question: To CEO or Not To CEO? (part 2 of 2)

Last time, I introduced a dilemma many founders face when they are finally negotiating term sheets with potential investors:

Should you accept an investment if the terms require you to step down as CEO?

I wrote about this issue because a past client recently lost an opportunity to fund his startup when the investors insisted that his partner be the CEO Instead of him. I don't know enough about the situation to be able to evaluate whether his decision was right or wrong, but it's an issue you should think through, and preferably when you're not under pressure.

10 Questions to Consider

If you are in the position of weighing a decision between investment and remaining CEO, congratulations! Most entrepreneurs never get to this point - you are obviously doing something right.

Questions to consider when making this critical decision:

1. Do the investors have a reputation for dealing with founders fairly?
2. Are they offering you enough funding to make a difference in your ability to succeed?
3. Do the investors have real domain expertise?
4. Do the investors want to bring in someone from outside or just make someone else on the team the CEO?
5. How much experience do you have in running a business?
6. Is it OK with you not to be working on the technology very much, if at all?
7. How important is it to you to be the public face of the company?
8. How much do you enjoy constantly being on the road, pitching the company?
9. Are you very good at pitching the company?
10. Are you OK with the fact that you will need to make unpopular decisions based on inadequate data that could make or break the company?*

* Hint: if your responses to questions 1 through 9 suggest that a different person as CEO might be better but you still answer question 10 in the affirmative, chances are you are letting your emotions get in the way of making a sound business decision - not what you want in a CEO.

After all you've given in blood, sweat and tears to the success of your company, it's very difficult to have a completely objective perspective about your startup. I strongly encourage you to talk to people who you respect and trust, and who are independent. Then listen to what they say even if it's not what you want to hear.

What do you think? Would you use other questions in addition to or instead of the 10 above? Who do you turn to when you need an honest sounding board?