There are a few reasons why people don’t like to have co-founders.
- Giving up equity is too expensive (or they believe that is)
- They’re too stubborn going with a belief that every business can be operated solo
Yes, there are other reasons but if I had to list them, I’ll be writing until Christmas 2025.
Over the past years, I had my fair share of offers in co-founding a business. But I also offered others the same ‘status’. And in many cases, sharing a business with someone else is better than being stubborn af just to see you drown or left behind by your competitors.
Let me explain a bit.
Giving up equity with or without voting rights is unknown territory for many solo founders. And the idea of giving up on a piece of something they’ve built or created is much harder than it looks.
After all, it’s similar like a buy-sell negotation. Buyers (in this case co-founders) want to own as much as possible equity from your business, and sellers (you as the original creator) want to give up as little as possible.
Reality is, giving up equity is in MANY scenarios the smartest move you can make. In this blog post, I am focusing on sweat equity. So keep that in mind.
Compare it with me. I am no developer nor a designer. Those two are defined my weakest spots and leaks. By default, I am forced to hire someone else to build me MVPs or be responsible for the ongoing development.
Which I like. I can pay someone and get something more tangible in return and see the whole process transactional at best. But MVPs are only as good as they last and It requires ongoing adjustments or tweaks to develop something more advanced.
If you’re bankrolled enough, then there’s no problem to inject more cash into your build, but let’s see the reality:
- A lot of new entrepreneurs are not going to risk their entire runway on an MVP alone or expose themselves to unneeded risks.
- Many people are simply not in a position to commit stacks of cash to a business in early stage.
Which leads to… the option to find a co-founder or someone that complement the lack of skills you might have. (in my case, development and design)
Expanding The Spectrum
Finding a co-founder makes a lot more sense when you want to fill in critical leaks into your business. And by leaks, I mean actual skills that contribute or put a lot of weight in whether the business succeeds or not.
There is a reason why VCs on average place 30% of the weight on the founding team and only 5%-10% is allocated to the idea, concept or MVP. Because the spectrum of skills that can reduce risks, becoming more resilient as a unit or business has a higher chance of succeeding long-term.
The upside is also more there, with more than one founder. I have seen too many projects on X being abandoned or founders going silent after a hot run with no future communication or updates on their built.
Co-founders can give your customers a lot more assurance or insurance even, which can expand the trust and brand equity factor even more.
In my scenario, if I were to pick a co-founder it would be definitely a developer. That plugs the biggest leak or weakness and should be rewarded for that. (as in % of the shares or equity given).
But when should you consider onboarding a co-founder?
The When & Why
Very case and situational dependent, but here are key indicators or signs when I would consider it:
- If I realize that it’s getting out of my league (skills)
- I want to move from growth to scale
- I need to shift my focus and I cannot apply a golden ratio
- When the MVP is mature enough to take it to the next level
- When I can negotiate from a position of strength, instead of weakness
- When I am capped in my ability to strengthen my position for the brand
- When the business was always meant for multi-founder status
- When I am looking to raise capital in 18 months from now
- When my risk and exposure is taking turns
You will find out that more than one reason will align with the when and the why.
When conclusions are drawn, how should you proceed?
Finding a co-founder, if you ever need one is NOT an easy task. It requires a lot of time and observations before even considering it with individuals.
Two examples (applicable to myself)
Which I recently announced Chain & I are going into BETA launch this week. I followed the business since very early stage and I was one of the earliest adopters trying out the platform, followed by a call to provide my input. Up until recently, we kept track of each other (either my progress or his) and about 6-7 months later the offer was thrown on the table by him, which I accepted.
Key take away? We didn’t force it, the relationship grew organically.
Evan has been one of the OG members of my private Discord group FocusX, so we know each other on different levels since last year with a relationship that has been organically nurtured over time.
Whilst he is a versatile developer, there are key elements that require other skills to bring this project to a new level. Hence, he threw me the offer of co-founding it and scale Supercharged in 2024.
Both of the scenarios came over time and built on a longer relationship (even virtual) than just a fling or those annoying “let’s collab” replies with zero context.
If you were to look for one, I would definitely do the following:
- Make a short list of possible candidates
- Match their DNA with yours and the DNA of the business and see if they are aligned with the mission
- Think about the terms and conditions
- Set a cliff or period where those terms should be honored, in case he/she fails to deliver or carry the responsibilities it’s usually a sign they are not as invested or committed as you are
- Talk, talk, talk. Have enough phone calls or meetups to follow your instinct
- See if it makes to onboard this individual over another.
- Think in %. As what the impact would be if this person would join your business. The implication can indicate how stronger you can become or how much work can be done in a day/week/month. The compounding effect goes into play.
What I am saying is, don’t just go with the next best thing or the first one that is eager to jump on board. Lot’s of people start spitting ideas how they would turn it around and that looks impressive on the surface, but it’s usually those that will never last.
You want co-founders that are:
- Experienced in their field
- Are conservative in their observations with a sober but clear view
- Can think critical and see beyond the monetary values
- Have future proofed skills in the past
- Are leadership worthy in case the business goes from growth to scale
- Are people managers
- Understand values
- Didn’t abandon 1000s of projects. It’s an indicator that they’re very distracted or lose interest after ideation phase
Sometimes giving up something, in this case equity can mean more progress. Lots of founders go with the beliefs they can take on the world on their own.
Starting a business is easy, maintaining and growing it is another challenge. Finding the right person that can run and operate the business with you is an other level.
Sharing in profits also means sharing the cost of doing business. You also can’t just show up whenever you like anymore which is not a bad thing. It leads to a more disciplined version of yourself.
Weigh in the pros and cons of your startup. And if there are signs you need to take a step back, then this might be the right time for you to consider going on a co-founder hunt.