How to find a Co-Founder for your Startup?
Sep 24, 2023
The most important decision of our life (if I may say) is whom we marry.
Similarly, one of the important startup decisions is who you co-found with.
As an entrepreneur, you should be very thoughtful and conscious while choosing a co-founder.
In my last 5 years of working with startups, my first evaluation criterion of any startup is its founding team.
I always check the strength of a founding team, no matter if it is made up of a couple of people only.
Because, as a business coach if I have to bet, I will bet on the founding team rather than on the business idea.
Before I joined any startup team as a business coach, I did not evaluate the idea but would like to meet the founding team, first.
With my experience, working with over 50 startups, I have learned to believe that you can change everything in the startup at a later stage – the product, the service, the employees, marketing strategies, the finance plan, or for that matter even the idea itself – but you cannot change the founding team, ideally. It is the heart and soul of the startup.
The failure of a founding team is the failure of the startup.
I recall beautiful lines from a book named “Zero to One” by Peter Thiel.
It says –
“When you start something, the first and foremost crucial decision you make is whom to start with. Choosing a co-founder is like getting married and founder conflict is just as ugly as divorce…. if the founders develop irreconcilable differences, the company becomes the victim.”
A question may come up…
Why Do You Need a Co-Founder for a Startup? Can you not just do it alone?
Before we go into detail about co-founders, we need to understand the terms
“Founder” and “Co-founder.”
A founder is a person who comes up with an idea (to be precise- a profitable idea) and then transforms it into a new business or startup.
Founders can set up a business on their own, or they can do it with others (what we call co-founders).
So, if a founder sets up a company with another person, they are both a founder and a co-founder.
Co-founder is a term that gives equal credit to a set of people who start a business together.
A co-founder may be part of the vision of a startup from the word go, or he or she may be brought on very early stages of the startup by the founder because he or she has skills the founder is lacking.
A cofounder is a person who accompanies the founder, in establishing the business, and takes the responsibility to convert it into a successful one.
It is also important to know what normally goes in the founder’s mind.
Founders are usually convinced that only they can lead their start-ups to success.
“I’m the one with the vision and the desire to build a great company. I have to be the one running my company.”
In my tenure of over 5 years as a Business coach, I have met quite a few entrepreneurs and have also worked with a reasonable number of startup founders, the majority of them have confessed that there is a great seal of truth in that.
In the beginning, the startup is only an idea in the mind of its founder, who possesses all the insights about the opportunity; the innovative product, service, or business model, and who the potential customers are.
The founder hires people to build the business in line with the vision and develops close relationships with those first employees.
The founder creates the organizational culture, which most of the time is an extension of his or her style, personality, and preferences.
That’s why, from the word go, employees, customers, and business partners identify start-ups with their founders.
Also, new startups are very close to the heart of founders. They have strong emotional attachments with the enterprise, to the extent that frequently they refer to the startup as “my baby.”
Many founders, in doing so, overestimate their prospects and become naïve about the kind of problem they might face.
Why do you need a Co-founder for Your Startup?
There are a number of reasons a founder can think of for having a co-founder.
The very first reason is the ‘requirement for Moral and Emotional Support.’
Starting a Startup is in no way an easy task. Running a startup is, even more, harder and more stressful.
Startups require much more time and effort than a 9-to-5 job.
With so much money involved and continuous threats from the competition and the kind of risks involved, it is nice to have a partner in your journey who shares your vision and on whom you can rely, especially in tougher times.
Need for complementary skills
Everyone has a different set of experiences from a particular background and thus someone can't be good or great at every area of a business.
You might come from a Marketing background and thus be well-versed with Marketing problems or concepts, but you might have little or no idea about the other areas that make a startup like finance, technology, logistics, customer support, Human resources, legal & compliance issues, etc.
Having a cofounder team with complementary skill sets is a boon for a startup. Different backgrounds also translate to different viewpoints, leading to different ideas.
This makes workflows quicker and smoother as every cofounder will handle departments according to his skills.
With the kind of risks and funding involved in the startup, the founder would wish someone to shoulder the risks with him.
On the other hand, even the investors would like to reduce their risks by funding a company with more than one founder.
The argument is; if the startup is with only one founder what will happen if tomorrow a founder is not there due to any reason?
The startup might die with the exit of the founder. Having more than one founder means greater stability in the minds of the investors.
Reason – 4
Division of responsibilities
There are too many responsibilities and running around to get even the smallest work done, especially when the startup is in the initial phases. A cofounder divides the stress and responsibility associated with running a startup.
Reason - 5
Better decision making
You don’t want your startup to operate on the likes and dislikes of one founder where every decision a founder takes becomes the final call.
A co-founder will act as a sounding board for all your thoughts, but also actively aid in making the final decisions.
From why a co-founder is required, now let us check the criteria to select the co-founder.
Every firm needs both technical and business knowledge. Co-founders should bring together complementary abilities, and not overlapping.
Many companies with spouses as Co-founders have succeeded.
Co-founders are often buddies, but it may not be the ideal approach to choose co-founders. Many wonderful friendships have seen ‘The End’ as a result of a failed business endeavor.
Through findings, it has been experienced that your best friend or spouse is not always a good co-founder!
After considering ‘WHY’ and ‘What’, let us find out At What Stage Should You Find a Co-founder?
There is no set moment when you should start looking for a co-founder.
You can have a co-founder during the ideation stage or when your product is about to launch or your product is already on the market, and you want to expand.
As I said, there is no set time or any fixed moment to hire a co-founder. It’s all up to you!
What qualities do you look for in a co-founder?
1. Someone who can share your business risks.
2. Someone who assists the founder in scaling the startup.
3. Someone who helps the founder to be at two places simultaneously and assists in being successful.
4. Someone who helps the founder to see things from a different perspective.
Where should you look for a co-founder?
1. Look into your contacts.
Look through your contacts for co-founders. Or perhaps a classmate who possessed an entrepreneurial passion?
Or search your network for co-founders.
Alternatively, collaborate with an active investor who is interested in bringing in the funds for your startup in exchange for equity.
2. Search in online communities
Look for co-founders in startup-related social media groups. Many professionals will be willing to join your business and give their expertise in exchange for ownership or equity.
3. From startup conferences or events
Co-founders can also be seen at startup events and conferences.
4. Posting requirements on the Job portals
Post the vacancy on job portals. You may have to satisfy the basic re-requisites of job portals for posting requirements.
It’s preferable to take your time when hiring a co-founder than to choose someone who isn’t a good fit for your company.
Once you choose a co-founder, you need to have a prenuptial agreement with your co-founder.
Ideally, the term prenuptial agreement is used for marriages – it is a contract agreed upon by both parties before marriage, around the division of property and financial support in case of divorce or break up of marriage.
In general, we all are “conflict-avoiding” human beings and hence we avoid talking about our inner concerns openly about what happens if any of the co-founders leave in between.
Things not discussed in the beginning will remain unsaid till the end.
A “founder’s prenup agreement” forces open discussion between co-founders on key issues before they begin working together and prevents things from getting into grey areas, in the event of conflicts.
Although the “founder’s prenup agreement” may sound awkward and a bit embarrassing in the beginning, it can help bring stability to your startup in the long run.
Your startup is your dream, and you will not wish your dream to get shattered.
We shall not go into the details of the “founder’s prenup agreement” however for the benefit of listeners I am sharing what are the things that must be included in the founder’s prenup agreement.
1. Roles and responsibilities
2. Equity split
3. Vesting schedule and exit clause
4. Intervention mechanism
Finally, what if you can’t find the right co-founder?
If you can’t find the right co-founder - don’t stop, don’t wait.
The start-up is all about YOU and your Dream.
Hire the people and get started.
Let people sense your commitment and your dedication to your startup, people will be ready to join you and your startup team will grow.