How does one start a business? This is a big question that young, aspiring entrepreneurs often ask the more experienced entrepreneurs around them. Many aspects are involved in starting a new business, but the human resource aspect—the people that you are building the business with—often comes out on top. After all, starting a business with the right co-founder can make or break a business.
While there is always an option to go solo, there are also many good reasons to have co-founders. So how does one find the right co-founder? How do you deal with the dynamics within the team? What to do when things go wrong? To answer these big questions, e27 reaches out to three startup founders and one investor to learn from their insights and experience.
Finding your co-founder
Some entrepreneurs decide to start their businesses by themselves, but according to our sources, starting with Theodoric Chew, Co-Founder and CEO of Intellect, having co-founders brings immense value to the entrepreneurial journey, which he describes as can be a roller coaster ride.
“On a personal level, a co-founder can provide invaluable emotional support and motivation during the highs and lows of building a company together, especially at the start when we had to do everything ourselves. From a practical perspective, it allows us to focus on our respective strengths and ensure all crucial aspects of the business receive attention,” he elaborates.
Chew explains how he and co-founder Anurag Chatani covers different business areas in running Intellect. Regular check-ins help to ensure that the co-founders are “on the same page” in growing the company. Yet at the same time, having a co-founder allows the company to have different perspectives.
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Wallex Founder Hiroyuki Kiga agrees that having a co-founder can help with the loneliness that can come with entrepreneurship.
“Having a sparring partner (or partners) who you can bounce ideas off with, have disagreements with, maybe something needed when you don’t know who to talk to,” he says.
Outside of the tech industry, co-founders of strategic communications company TriOn & Co take turns to share their stories. For Joel Lah, Fintech Lead and Chief Research Officer, having co-founders enable the team to be accountable to each other, and it helps to keep the work standards high.
Another point that young entrepreneurs should consider is that investors tend to favour investing in teams of co-founders. According to Karan Mohla, General Partner, B Capital, having a team of co-founders demonstrates a shared commitment and increased expertise. However, he acknowledges that it is not a blanket rule.
“Lastly, as there always are risks associated with starting any business, a co-founder can not only help share the financial burden but provide emotional support as well during turbulent times,” he stresses.
But what are the qualities that one should look for in a co-founder? All of our sources agree that it all has to start with having a shared vision, being trustworthy, and having a strong sense of resilience. But there are also other qualities that one should pay attention to.
“A shared sense of humour is also an excellent bonus to get through the challenging and tiring times,” says Charu Srivastava, Corporate Affairs Lead and Chief Strategy Officer at TriOn & Co.
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When things get tough with your co-founder
Another question that often arises when it comes to working with a co-founder is when things get tough. What are the arrangements that co-founders can come up with to help prevent unnecessary conflicts? Or at the very least, help them to deal with conflicts wisely?
“Bringing on a co-founder involves multiple considerations; hence it is essential to have clear agreements and contracts in place to protect the interests of all parties involved … Equity split and ownership are discussions that are sensitive and complex and are also important but often difficult to have among co-founders,” explains Mohla of B Capital, stressing the importance of putting things on paper.
According to Kiga, another valuable piece of advice is to understand what is most important for all parties involved, especially regarding major decisions such as an acquisition.
“When it comes to these liquidity events, there will be shareholders who will support you and shareholder(s) who may stand in the way. Of course, you can’t make everyone happy. One way to resolve these types of disagreements is to make sure you understand what is important for each shareholder. Once you know these variables, the negotiations with our shareholders, not with the acquirer, became smoother,” he elaborates.
How should you approach conflict when you can no longer avoid it? The three co-founders of TriOn & Co share how they handle it.
According to Srivastava, as much as they wanted to keep initial costs low, they saw the need to invest in hiring a lawyer to make sure that there were no loopholes in their contracts.
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This is something that Marion Ang, ESG & Government Lead and Chief People Officer, agrees on.
” … Having a solid groundwork for the business is no easy feat, but we were clear that we wanted a proper foundation laid to build upon. We did not want to cut corners and run the risk of future complications,” she stresses.
“So, while it cost us money and time, we made sure no stone was left unturned when it came to the foundation of the business – from our HR policies, shareholders’ agreement, contracts, governance structure, accounting, benefits and legal agreements, just to name a few.”
Another challenge people tend to avoid is discussing morbid topics such as what happens if one of the co-founders dies or becomes mentally incapacitated. According to Lah, the topic of leaving the company is also something that they discuss early on.
Our other sources gave the same advice.
“While this is not ideal, it does not hurt to plan ahead as an exit strategy can be an important guide for your business continuity plan. From the get-go, founders should form a clear vision of the direction of their company and calibrate their strategy accordingly. This is also important because questions about disbandment will likely arise from board members, investors and employees,” says Mohla.
“Any disbandment should never become a distraction for the business, and founders should focus on the day-to-day needs of their business and employees. As company shareholders, at the end of the day, founders need to always think about what is best for the company, not just their individual interests.”
For Chew, while he and co-founder Chatani have yet to encounter such a situation in their partnership, they are committed to having open and honest communication.
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“It’s crucial to approach the process fairly and respectfully, ensuring an amicable separation that minimises the impact on the business and allows each individual to pursue their respective paths,” says Chew.
Ultimately, Kiga advises young entrepreneurs not to jump straight into things.
“Evaluate and understand what each person can bring to the table. Doing a startup is a long-term commitment, and there will be challenges. It comes down to who you want to go through those challenges with and being able to make sacrifices together,” he closes.
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Image Credit: RunwayML
Editor’s Note: This feature article is part of the Young Entrepreneur series, where entrepreneurs and investors share their experience and insights to help aspiring startup founders find their way. If you are interested in taking part in this project, please reach out to e27 content team at writers@e27.co
The post Finding the right co-founder involves having tough conversations–and a great sense of humour appeared first on e27.
