Startup #Cofounder #RiskManagement
Hey everyone,
As a young tech company founder, I’ve been thinking a lot about how to protect my startup when looking for cofounders to join the journey. It can be a bit daunting, right? You want to find someone who shares your vision and drive, but you also need to safeguard your company from potential risks.
Here are a few tips that I’ve come up with to protect your company when searching for a cofounder:
- Perform thorough background checks: Look into the potential cofounder’s past experiences, achievements, and any red flags that may arise.
- Set clear expectations: Make sure to outline each person’s roles, responsibilities, ownership stakes, and decision-making power right from the start.
- Draft a detailed cofounder agreement: This document should cover everything from equity distribution to dispute resolution processes.
- Trust your gut: If something feels off during the initial discussions or meetings, don’t ignore those instincts. Trust is crucial in a cofounder relationship.
Do you have any other strategies or stories to share on protecting your company when looking for a cofounder? Let’s learn from each other and navigate this journey together! 🚀💡
The way I’m dealing with this with my co-founder is that we aren’t even issuing shares for a bit until we see that we can work together and we can actually do what we want
So a month or 2 of working together with no shares issued
Make any offer conditional on execution over a time period (a trial period). And have a co-founder agreement with clearly defined expectations from both parties. And have a vesting schedule for all equity. If they fail to live up to agreed upon expectations it needs to burn them, not you.
I have done a hybrid version of “Slicing Pie” in two of my startups and it has worked great both times. We had our attorney modify to fit our needs…
The ChatGPT TLDR:
The Slicing Pie method is a dynamic equity split model for startups. It allocates equity based on each participant’s contributions of time, money, ideas, and other resources. Equity shares adjust in real-time to reflect the ongoing contributions, ensuring fair and transparent distribution. This model helps mitigate common equity distribution issues by providing a framework that adjusts as the company’s needs and participants’ contributions evolve.
Four year vesting for shares with one year cliff. As one commenter noted, you can also do a trial period before papering everything so you don’t waste a bunch of money. Employment agreement should dictate s/he can’t work at other jobs. Lots of half interested cofounders these days working on a bunch of projects.
Take them on as an advisor first with a small set of advisory shares. You’ll know if it feels right to bring them on as a co founder within 3-4 months.
It’s good to drop the language of “my company is looking for a cofounder”.
You just graduated and you have a chatbot project. Call it what it is.
Finding another person to build this out as a company with you is a decision made easier by precedent. As others have said, once you actually register you will have founder agreements, and the typical path of four year vest with one year cliff available to you. All IP gets assigned to the company. It’s not yours anymore.
Worth talking to experienced angels and investors in your area. Questions like this are also a great way to make those contacts and get advice. Just keep it real – a grad with a promising project is way more appealing than some kid blustering. People will want to help you, and you’re asking the right questions. Good luck mate, you’re on the journey now 🙂
The best way? Find a great cofounder. People you like working with are #1 here.
If you can’t do that, have a vesting schedule and a clause for if a cofounder isn’t pulling weight. If you have 2 other cofounders(Meaning 3 man team) it’s much easier to survive a cofounder leaving. Plenty of large companies have had a cofounder leave when it’s 3+. Apple, Snapchat, Facebook/Meta. The thing here is, most of these companies had multiple cofounders that were able to step up to the plate. If you’re really worried, get 2 cofounders. Statistically speaking, at least 1 of them will be half decent.
On the same track, my advice is to find someone who invests as much time as you do. While time isn’t easy to measure precisely, this approach can help identify a more suitable person. Give him some time to demonstrate his responsibility. If doesn’t meet your expectations, just let him go.