If you are set to commence your startup’s business operations, one of the factors you are probably considering is how to onboard the right co-founder to co-mastermind your business venture. At this juncture, it is key to take note that as important as choosing the right co-founder is, maintaining the commercial relationship between the two business partners is also key.
A cofounder may be part of the vision of a startup from the get-go, or the cofounder may be onboarded very early on by the original founder because they have skills the founder is lacking. For example, the original founder may possess the original idea or solution, but no software development or engineering skills. Consequently, it greatly benefits the original founder to onboard a technical cofounder early on in the process of launching their startup. But it’s not always easy to find cofounders that are right for the business model or that will truly be the support required for the success of an original founder’s vision.
Choosing the Right Cofounder
Very similar to the process of choosing a marriage partner is how founders decide what they should search for in a cofounder. Choosing the right cofounder is not the easiest of tasks, albeit a rewarding one; when done right. It is advisable for the original founder to conduct an examination on what skills they are lacking. If you are an engineer, you may want to collaborate with a designer or a “visionary/ideator”. If you’re a “vision person” definitely find an engineer and a designer. If you already have engineering and design knowledge under your belt, look for someone who is really skilled at marketing and managing people and can explain your technical talk to the rest of the team.
If you are building a tech startup, it goes without saying that your co-founder should have a technical background – particularly if you do not possess the technical prowess required to build your solution. This will save you a lot of money when you’re bootstrapping, as well as ensure that you deploy a great product.
Asides from ensuring the functionality of the partner you onboard as your co-founder, enjoying working together is very crucial. That you both enjoy working with one another ensures that the relationship is not mechanical. It is also advisable to partner with a cofounder whose temperament complements the temperament of the original partner. If you are the best software engineer, all of that good juice may require a charismatic sales person as your cofounder so that your well-put-together solution really gets to the market and it is accepted by the target customers. You may also decide to onboard an administrator/operations individual to manage the talents and operations of your Company.
Tom Williams, a serial founder, once shared an insight that is noteworthy:
“I’m totally unconvinced that two people can find a person they haven’t known previously, and become an effective co-founder,” Williams states. “I think you’re better off finding the money to hire someone than actually finding a co-founder. The main reason? You probably won’t find someone as passionate as you are about the organization you’re building. And keep in mind, I have no clue who you are or what you’re building so that’s no judgment on you or the idea, just the reality I’ve observed over 20 years of startups.”
Also, decide early on whether what you really want to do is to employ talents or it is really a cofounder you need for the role that you so much require a mastermind to fill.
It is important that when looking for a cofounder, your motives are in the right place. Ensure you are not just looking to use another individual. Taking advantage of a person’s talent or devising a means to use “free labor” is definitely a wrong motive that can turn sour in the near future.
Founders and Operating Agreement, Do I Need One?
It is not unusual for folks to say statements along the lines of; “we are friends, why do we need legal cofounder agreements?” But no matter how good the relationship with your business partner is, you both will inevitably run into differences along the line.
Although onboarding a cofounder may seem like just another relationship with a good friend, it really is not. It may interest you to know that cofounder fallouts are the number one early startup extinguishers. Very recently, Mark Zuckerberg’s cofounder, Eduardo Saverin, slammed him with a law suit with claims that Mark squeezed him out of the business.
If you were asking, yes, you can completely lose the ownership of a solution you built ground up if you do not have adequate legal and protective devices in place.
Bottom Line
Please note that fallouts among cofounders can be completely avoided, mitigated or anticipated and rightly covered via tactful legal and commercial devices engineered into a cofounders’ and operating agreement by a specialized corporate lawyer.
When clashing opinions arise, a carefully drafted founders and operating agreement then comes in handy. It is really the smart founder that documents all the important guidelines and framework of the business partnership between them and their cofounder. In fact, without a founders and operating agreement, a business may be doomed for chaos, the chaos that could have been tactfully avoided. Should a business partnership unavoidably go down the drains, the dispute resolution terms of a tactfully crafted founders and operating agreement is able to guide on what happens upon the exit of a cofounder.
Essentially, it is advisable to think things through and have all the required legal devices in place even before delving into the commencement of business relationships with cofounders and other partners.
About the Author
Taiwo Lawal Esq. is a corporate and transactional lawyer. With about half a decade’s experience servicing startups, she is the founder of Unicorn Valley Law, doing what she loves the most- providing bespoke advisory from the “well of water” within her.
Taiwo is happy to read from you and provide bespoke solutions to your startup’s legal and commercial needs. Kindly write her via hello@unicornvalleylaw.com or schedule a call via calendly here: (get in touch).
