Having one person lead negotiations brings the following benefits:
Makes it easier to build rapport
Results in more rapid progress
Demonstrates trust between the founders
That's because there’s no team to manage and the overhead to keeping everybody completely informed is minimal compared to the benefits of getting everybody's input and maintaining complete alignment. This consensual approach also helps cement relationships ahead of what is likely to be a rocky road.
The natural tendency for companies operating in this mode is to have everybody participate in all investor meetings and on all investor calls. Because getting funded is often a matter of life or death, everybody wants to be involved.
There are benefits to this approach - alignment, everyone's position gets heard, different people's expertise can be leveraged at appropriate moments, and there are multiple ears to hear what the investor is saying - but those benefits are often outweighed by the friction it adds to negotiations.
The first casualties are rapport and rapid progress. Negotiations go best when both sides know their position, communicate where they are flexible and make concessions in realtime. In a good 1-2-1 negotiation both parties are using body language, tone of voice, and a myriad of other small tricks to communicate what they value and their desire to get a positive conclusion and what they value.
It's a subtle process of back and forth, with both parties looking for and responding to subtle cues so they can find the white spaces where they can make a little give that is valued disproportionately by the other side. When co-founders are on the call together it's often tough to get that process going because each wants to check with the other about interpreting the cues from the investor, giving cues of their own and making concessions. In the absence of that process, discussions often become stilted and it's common to have to break off negotiations so that the founders can talk together and coordinate their response.
The slow progress within meetings is often then compounded by increased time between meetings, firstly because simply picking up the phone doesn't work and then because it takes longer to coordinate 3+ diaries than 2.
Time kills deals, but often more dangerous than the slow progress is the increased risk of getting stuck on key terms and descending into a zero sum negotiation. The reality is that when VCs or angels invest in startups, valuation is often the key term but it's rare for either founders or VCs to be 100% focused on share price. Ordinary shares vs prefs, liquidation preference, option pool size, anti-dilution, founder vesting and protective provisions also all play a part.
When the rapport is good and the subtle cues mentioned above are present, it is much easier to trade these things off against each other. When discussions are stilted it becomes much more likely that the negotiation gets focused on a single issue. At that point, one side's gain is the other side's loss, the sense of shared purpose in keeping negotiations constructive may falter into irritation, and reaching agreement becomes less likely.
As well as making the negotiations easier, appointing a single founder to lead demonstrates trust between founders which makes investors think more highly of the team. Conversely, if founders have to break off negotiations to check in with each other all the time, or won't do calls unless they are all present, it makes it look like they don't trust each other.
Founders falling out with each other is one of the most common causes of startup failure, so investors are very tuned to danger signals and low trust is high on the list. As is talking over each other in meetings.
As with everything in startup land, the best way to think of this is as a probability game. It's more than possible to conclude a successful negotiation without appointing one founder to lead, but your chances of success will be greater if you do. Perhaps much greater.