It’s a question that even the most self-confident founders will have asked themselves at some point: do you need a co-founder? By their very definition, startups are high-risk businesses, and some entrepreneurs believe adding one or more co-founders is one way to mitigate risk while tapping into expertise and connections.
For others, having to divide their time, attention and (most importantly for some) equity, it’s simply not worth the bother.
The question was put to a packed room of startup founders at the first Founders’ Network breakfast held in Leeds. After being divided into two groups, they were asked to present their thoughts to the rest of the group. It’s safe to say that opinion was divided, with personal experience playing a big part in which position founders took on the issue.
Here are some of the session’s most illuminating quotes, which have been anonymised to respect the session’s confidential nature.
Yes! Reasons to hire a co-founder
Expertise: “They can bring in something that you don’t have, so you’re able to be a bit more diverse in what you can do between you.”
Diversity: “Having diversity in skills and values is important too. One of the problems that we got into as a company was everybody agreeing that something was the right path with nobody disagreeing; there was no dissenting voice.”
Bounce ideas: “You can bounce ideas and have a really frank and open discussion where people can tell you if you’re coming up with something deranged – like opening a shop on Mars.”
Dividing labour: “There’s loads of stuff that you need to do, and you can spread your tasks between the two of you.”
Emotional investment: “Your cofounder should be invested in you, whereas employees and freelancers might not be.”
Credibility: “When you’re looking for funding, if you have a good, solid core team that are a core part of the project, you’re more likely to be seen as credible in the eyes of investors.”
Connections: “Your cofounder should have a more useful set of connections than regular employees that you bring onboard.”
Moral support: “Things often look like they’re going swimmingly with a team when they’re not. The discussion with somebody knows exactly what’s going on and isn’t going to start panicking is useful.”
Bounds of risk: “If somebody gets hit by a bus, the company doesn’t have to stop. That’s something I nearly encountered! Investors may take this into consideration before investing in you.”
Access to finance: “If somebody is joining and bringing investment with them, you might be able to avoid approaching investors.”
Fostering culture: “We realised that we were a team of blokes selling to a target market of women, which wasn’t the right thing to do. We needed to change our culture and bring a female co-founder onboard.”
No! Reasons not to hire a co-founder
Imbalance of commitment: “When everybody’s really enthusiastic at the start, sometimes that doesn’t last. If you end up with a situation where you both have 50 per cent of the business, the other person might only be doing 30 percent of the house. That can be difficult.”
Hard to get rid: “You can always fire a consultant if they’re not doing what they’re meant to do, but once you’ve got a cofounder who isn’t delivering, it can be difficult to get rid of them.”
Loss of control: “If you have more than one person making key decisions it can be difficult to drive things through. If you think you’re absolutely correct and then you have to get buy in, that can be tricky.”
Dilution of authority: “If there’s a lack of clarity, there’s a risk that co-founders could give different answers to members of the team when being asked for help or advice.”
Drop off of interest: “It’s something I’ve experienced. In six months time you might still be fired up for the project or task you’re doing, but your co-founder might not give a toss. That can he hard.”
Communication issues: “Co-founders can read from the same sheet of paper but come away with very different ideas of what’s going to happen. If there’s one person at the top, that can make the team’s mission clearer and there’s no split.”
Personality clashes: “You might agree on everything you’re doing in the business and everything’s going swimmingly, but at the same time you can’t share a room together and sit down for five minutes or agree on anything.”
Avoid emotional decisions: “Decisions aren’t always rational ones. If you’re a co-founder making emotional decisions, you need the facts to back them up or you can become attached to a decision that you won’t let go of.”
Expertise in selling: “I think the fundamental issue here is whether you can sell. If you can, then I don’t think you need a cofounder.”
Giving up equity: “Any equity you give up to a co-founder will cost you a lot of money down the line if your company is successful. But that’s a chicken-and-egg situation – if they hit a performance target to unlock equity, that could be a half-way house solution.”
- The next Founders’ Network breakfast in Leeds takes place at The Banyan Bar & Grill on Thursday 5 October