Starting a business venture, is truly a difficult exercise, requiring lot much hard work, proper planning, funding propositions, just to list a few.At to avoid initial hiccups, risks, and financial liabilities, you look for a Co-Founder. Having said that finding a right co-founder for your start-up is not an easy task.
Mark Suster , a 2x entrepreneur and partner at GRP Partners, the largest venture capital firm in Southern California, has tried to demystify the myth surrounding founding a co-founder in his blog post.
Given is a quick summary of Mark Suster’s POV:
- When you start a company a 50/50 partnership seems obvious. Either you’re not technical and you think you need a technical co-founder or vice-versa
- Conventional wisdom says that you gain far more in working as a team than you lose by diluted by half before you start.
- Conventional wisdom doesn’t account for all of the things that go wrong in partnerships over time; especially ones that are formed quickly and without a long gestation period.
- It is increasingly popular to have “founder dating” or “startup weekend hackathons” of some variety or the other. We get cast together with a team of people we barely know and if we win we gleefully announce we’re going to do a company together. We don’t even know whether they snore.
- You often have very limited perspective on whether this person will continue to be a great partner 2 years down the line, 4 years down the line, 8 years down the line
- Even if you *think* you know them, people change. One person gets more risk averse, the other has more risk appetite. One person gets married or has kids and starts to de-prioritize the business. One person loses the passion for what you do. Or you have disagreements about strategy, recruiting, funding, etc.
- 50/50 partnerships can be hugely unstable – even if you’ve been friends since high school.
- And all of the hard work is ahead of you. You’re only going to find out whether they’re TRULY a great partner after you’ve put in years of money, blood, sweat & tears.
- I think most people do 50/50 partnerships because they’re afraid to start alone. It’s scarier because if you fail it was only you and all your fault. Somehow it feels easier to leap together. I know. It’s what I did the first time.
- I say, “go ahead & take the leap” if you want to start a company (many people don’t want to – that’s OK, too.). Hire your co-founder. Give them a large sum of equity. 20%. 30%. Even 40%. Vested over 4 years. If you ever fall out of love you have a pre-nuptial agreement. I talk about that in more detail here.
- Truly treat them like a co-founder. Give them access to all confidential information. Involve them in fund raising, hiring, strategy, etc. Publicly call them a co-founder. Don’t rule like a dictator. But … if you have very big disagreements about funding, risk levels (e.g. like how much burn rate), whether to sell the company, etc. you won’t be backed into a corner or unable to make tough decisions. Read the complete article here.