It is incredibly difficult to build a startup from scratch and even more so when you are a solo entrepreneur. Working with a co-founder can be a great way to share responsibilities, time and skillsets when building your business. However, choosing the right co-founder of your business is critical as co-founder tensions can cause delays and distractions for your team and business. This article provides a decision making process to help you choose a potential co-founder for your new startup idea.
Do you need a co-founder?
Whilst starting a new small business on your own can be challenging, many entrepreneurs have succeeded without a founding business partner. Starting a startup business on your own is possible if you can, as one founder, attract a founding team, mentors and venture capital investment. This will mean that you have what it takes to hire a founding team, build a minimum viable product (MVP) and attract early customers. If you have what it takes then starting on your own means you can have more equity in your business and make decisions faster. If you do not have what it takes, either because of your skillset or because you are a first time founder, you can increase your chances of success by finding a potential co-founder. For example, business founders tend to partner with a technical co-founder or CTO in order to share the fundraising and product building responsibilities.
What are you looking for in a co-founder?
A great co-founder relationship is essential for the success of your early-stage startup. To ensure you have a good personal relationship with your potential partner, you should start by seeking a co-founder with complementary skills and know how. This is important so that you each understand your roles upfront and how you will contribute to important decisions. Whilst a co-founder does not need to be your best friend, you must accept that you will spend a lot of time together.
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How to find a co-founder?
Searching for a co-founder can be a long and lonely task especially at the beginning of your startup journey. You can start by looking through your personal and University network, followed by LinkedIn and relevant meetups and hackathons. Some incubators or accelerators such as Entrepreneur First can help you find a co-founder within the cohort.
How to hire a co-founder?
Once you have found a potential co-founder, you will need to interview them to determine if they believe in your startup's vision and if you are both compatible. Their motivation for partnering with you needs to be high so that they do not give up easily if things go wrong. Your compatibility with the co-founder is also critical as startups fail when the relationship breaks down. Once you have interviewed co-founder and they have passes the motivation and compatibility checks, you will need to agree on the terms of their engagement. You must agree on the equity split in your new business which will be proportionate to what each person brings to the project. A co-founder employment agreement will then be necessary to formalise their terms of employment with your business.
At this stage, it can also be worthwhile to use a contract management platform like Legislate to streamline the creation of employment documents for your co-founder and future employees. Moreover, Legislate makes startup due diligence extremely simple as it stores all your standardised contracts in one place. To get started, create a Legislate account today, read a tutorial or book a demo now.
Legislate is a contracting platform where business owners can create contracts to help grow and develop their business. Legislate's employment offer letters and contracts are key in protecting your IP and Legislate's NDAs are crucial to ensure you can have conversations and partnerships to help develop your business and brand. Book a demo or sign up today to put the confidence back into contracting.
The opinions on this page are for general information purposes only and do not constitute legal advice on which you should rely.