Many studies show that start-ups led by two or three co-founders are more successful than single-founder-led companies. In fact, co-founders with a shared history together achieve the most success (Aileen Lee, “Welcome to the Unicorn Club, 2015: Learning from Billion Dollar Companies”).
Let’s assume you’ve decided to bring on a co-founder or two. What does that really mean? Well, it’s a lot like dating. You have no idea how things will work out in the end. You just need to keep putting yourself out there until you find the right fit.
Adding co-founders also represents a vote of confidence in your startup. With co-founders, you show other potential team members that your idea convinced the smartest people you know to join you on this adventure.
If you already have someone in mind, who you are considering as a cofounder, don’t forget to take the cofounder assessment. And, if you are not sure whether you need a co-founder for your startup, take this assessment.
Successful cofounding teams have one thing in common. Members of the team know and understand each other very well. Most successful co-founding teams include couples, good friends, colleagues who have worked together in the past, and siblings.
The commonality here is founders know each others’ strengths and weaknesses.
The ideal co-founder shares your values and is trustworthy. You need to be able to speak your mind without the need to sugar-coat it, and know that your cofounder won’t betray your confidence.
A co-founder needs to have passion for your idea and the drive to tackle it. The last thing you want is someone who doesn’t truly believe in what you’re striving for. As you search, look for someone who has complementary skills and is open to dealing with conflict and disagreements.
So, how do you find co-founders for your startup? If you are looking for a technical co-founder or CTO for your startup, you might want to read this post first.
Also, check out our post on 15 ways to overcome conflict with startup cofounders and business partners.
The number one cause of early death for startups is co-founder blowups. But for some reason, a lot of people treat choosing their co-founder with even less importance, than hiring. Don’t do this!
Instead, follow this step by step approach to find your ideal startup partner.
Create a cofounder pitch
When looking for a co-founder, it’s suggested that you put together a co-founder pitch to help with the selection process.
While you don’t need an investor-level presentation, you need to sell yourself and your idea.
Your potential co-founder has a lot of options like working at a big company, working for themselves, pursuing higher studies, building their own startup, etc. So you need to be able to convince them that your idea has great potential and that you as the founder have the relevant experience and insights to execute it.
You have to show them the big picture so that they are intrigued to join you.
Note that different people have different motivations to join your startup. Some want to change the world, some looking for stable work, some want to make it big.
Make sure you’re looking for someone whose skills complement your own and who can fill in the gaps that you can’t.
Find people who have a similar tolerance & motivations for risk & rewards and work well with you. They can be your former colleagues, peers from college, or a reference from a very close friend or relative.
First, look at your friends and contacts. If no one comes to mind, then expand your search and ask around. Use your network of friends, family, and colleagues to do this. Get out there and network at different events and meetups.
In your journey, when you come across someone with who you want to partner with, ask them the following questions.
- What skills do you bring to the table?
- Within those skills, what do you prefer to do?
- Do you have the technical background to build your product or service?
- Do you know the industry that you are starting this company in?
- Which area of the team mix do you have the least amount of experience in?
In the end, it comes down to activating your network and telling people who you know and trust that you’re looking to build your founding team.
Share your idea and tell people about the strengths you’re looking for in a co-founder and the needs of the company.
Sometimes you get cofounders along the way. If you start and do well, cofounders will find you. Lots of great companies started this way.
Before you partner with anyone, ask yourself, “Would I share a significant part of my life with this person?”
Startups are hard and you will be spending a lot of time with this person. And as your company scales, you will need to spend more time. If this is impossible to imagine, proceed with caution.
In the beginning, it is difficult to assess whether your potential cofounder presents a possible risk and how well you can work with them. These are the types of issues that can cause significant risk to the business.
That’s why, to whatever extent possible, get to know your potential cofounders early. Meet for lunches and dinners, and work on small projects together. Do whatever it is you need to take a ‘test-drive’ before you all commit to quitting your full-time jobs.
During your test project with your potential co-founder, you’ll want to consider:
- Little things about a person that repeatedly frustrate you
- What gets promised versus what gets delivered
- How this person manages time
- The overall commitment to real work
- Do you have fun working with this person
If you have worked with the person in the recent past and feel that they have all or most of the qualities you are looking for, this part can be skipped.
Take the cofounder-fit test
According to Paul Graham, founder of Y Combinator, “Fights between founders are surprisingly common. About 20% of the startups we’ve funded have had a founder leave.”
Does this person have skills and knowledge that are essential to the success of my business from day one? Do I need them to get this thing off the ground? Essentially, your first question is,
‘Do I have a company without this person?’
Take the cofounder fit test to find out if he/she is a good fit.
Legalize the relationship
If you plan on bringing on a co-founder you don’t know, then consider working with them briefly first before you decide to go into business together.
You’ll want to do this carefully due to intellectual property and legal issues—you don’t want to create a competitor before you even get the business running—but it can be a great way to test the waters before jumping into a co-founder relationship without enough data.
If you decide to test the relationship before committing, then put together the appropriate paperwork to protect yourself and your potential co-founder.
At a minimum, set up a contractor relationship where it’s clear that the work being done is owned by the company, and in exchange, there will be some compensation. That compensation can be in cash or even stock in the company.
If you decide to pursue this path, you should quickly talk to a lawyer to create a legal agreement describing your relationship.
Split equity & set expectations
Starting a business is a long-term commitment, so you need to make sure that you and your partners will be aligned well into the future.
It’s crucial that all founders’ visions for the future, both near-term and long-term, are similar. If you want to build a $100 million business, but your partner would be perfectly happy making $100,000, you will run into problems.
Sometime in the future, your partner may want to slow things down and make some money off the table. Of course, this will be about the same time that you’ll want to expand and grow. Situations like these don’t end well, and can easily end the partnership and even the business.
The key is to set expectations from the start.
Have open and candid conversations about your vision for the company, the product roadmap, and what you want personally out of this. Make it clear. and make sure that your paths are aligned.
If there are red flags, don’t ignore them and hope for the best. As uncomfortable as it may be, it’s much better to resolve issues sooner rather than later, when the stakes are much higher.