You’ve officially decided that you are an entrepreneur. You have the traits, you have the motivation, and you are 100% ready to dive in. Here’s the problem, you’ve likely spent very little time thinking about a cofounder. Why does this matter at the very beginning of the startup journey? It’s simple: 67% of early stage companies failed within 3 years of launch due to cofounder tension and conflict. Ouch.
From our perspective, it’s confusing that very few entrepreneurship courses put emphasis on finding the right startup cofounder when nearly 70% of businesses fail because of this simple decision. Even more confusing, is how little time is spent preventing these falling outs through success metrics like: leadership qualities, mindsets, values, interventions, and documentation.
To be blunt, before diving into this cofounder manual, partnerships are probably one of the scariest decisions you make at the beginning of a business but when you choose to avoid partnerships you are also avoiding the many opportunities that a good partnership can create. Multiple studies have confirmed that partnerships have a higher chance of creating sustainable companies, faster growing companies, more innovative companies, more creative companies, and much more. That’s why we personally only invest in startups with partnerships of at least 2-3 people and we aren’t the only ones. And remember, a partner could ultimately lead you to great success if done correctly or horrible turmoil if the following set of principles get ignored. Let’s get started!
Key Concepts Covered
- Should you have a partner?
- Identify what you are looking for in a partner
- Preselect your cofounders
- Steps you should be taking when getting serious with a partner
- Tips to keeping a cofounder relationship strong
- Cofounder equity splits
- Equity allocation
- An introduction to a Founders’ Collaboration Agreement
- The Founders’ Collaboration Agreement
- Overcoming cofounder conflict
- Avoiding cofounder fatality