07 Jul Why Having a Co-founder is Important for your Startup Success
Do you know the old saying, “two heads are better than one”? Well, it holds true for those wanting to found their own startup. A recent analysis shows that a massive 80% of all successful startup companies have more than one founder. This is not an arbitrary number. It’s a number every startup founder should listen to. Even if you think you can reach your goals on your own, the truth is that you’ll have a much better chance of success with at least one co-founder to help build your business.
But why are co-founders so important to startup development? And how can you identify the perfect co-founder to help make your vision a reality?
Read on to find out.
Why Having a Co-founder is Important
While building a company alone is possible, a talented co-founder working alongside you will maximize the likelihood of turning a profit and creating a sustainable business.
Reasons for this include:
- Practicality: Starting a business is difficult, building momentum even more so. Having more than one co-founder means that you can share both the time and the effort required to make your startup a success, increasing efficiency.
- Solving Problems: With more than one founder, you’re more likely to identify novel solutions. When faced with a difficult problem such as how to market a product to a specific demographic, for example, ideas can be explored together, collectively producing a series of quick, varied solutions. Not only that, but your co-founder may have a solution to a problem which you would never have thought of, which makes them an indispensable resource during difficult times.
- Lighten Expenses: There’s no getting away from it – you will probably have to pay for the initial phase of your startup project yourself (unless you connect with the right investor). After this, you might be able to attract investment, but if there is more than one of you in the beginning, that means at the very least halving the costs.
- Alleviate Stress: Creating a startup is one of the most rewarding things you can do, but it can also be one of the most stressful. When worrying about tasks being completed effectively on time, as well as the financial health of your company, another founder can help to share the burden of stress, alleviating some of the pressure, which will go a long way to ensuring that you stay calm and collected when most needed.
- Attracting Investors: With more than one founder, a startup is more likely to attract investment. There are two main reasons for this: First of all, investors will see your startup as a lower risk investment. If something should happen to you or you decide to sell your stake, there is at least one other founder in place who understands the business better than anyone else, and who can chart a course to profit. Second, and this is especially the case with angel investors, twice the number of founders tends to mean twice the number of potential investors. Both of you will have friends and families, perhaps even professional connections, who can help invest capital to fund the initial stages of your startup.
As you can see, having a startup co-founder is extremely beneficial, but there are bumps along the way which will need to be ironed out. Not every potential co-founder is a perfect match. But how to differentiate between those who will help your business, and those who will hinder it?
How to Identify the Right Co-founder
62% of all startup failures are because of arguments, disagreements and conflict between different co-founders. Let’s put that into perspective – the reason most startups fail isn’t due to lack of talent or other shortcomings, it’s basically down to bad communication.
I should stress at this point that the benefits still outweigh the risks (that’s why most startups still have co-founders). Indeed, these risks can be all but extinguished by knowing how to choose the right co-founder for your startup.
The most effective co-founders should:
- Be Amiable: He or she should be easy to work with. This doesn’t mean that they won’t ever speak their mind, but it does mean that your co-founder should be someone you can build a healthy working relationship with. If they appear to be moody or lacking in diplomacy, it’s best to look elsewhere.
- Show Respect: Your co-founder should show respect for what you can provide in terms of your talents; this should be reciprocated. The most effective way to build a strong united front is to understand what each of you brings to the team, and to value that.
- Give Space: Some people find it difficult to relinquish control of something they are invested in, but for the good of your startup, you and your co-founder(s) have to learn to trust one another. If you have a set number of responsibilities, and can adequately attend to them, then your co-founder should not try to take this from you. Space to excel must be given.
- Mission Alignment: The worse thing you can do as a founder team, is to pull in different directions. co-founders must have the same outlook for their business. These should be vocalized and even recorded on paper, with all co-founders agreeing to a specific set of goals which they will all work towards together. If there is major disagreement, this can be fatal for a startup, though not always.
- Flexible: All founders need to be open to new ideas. If better ways of achieving a goal can be found, then they should be implemented. That means that you and your co-founder(s) should listen to each other and be willing to admit when someone else has a better strategy for completing a task.
- Knowledge: This is very Your co-founder should have knowledge and talent which will help your startup. There is no point in going into business with a co-founder if they do not have the expertise or understanding to make your company a success. There is one caveat here, however: if your co-founder is mainly a financial investor then this could still be an opportunity worth taking.
- Experience: Lastly, experience counts. 39% of founders have been involved as a founder in another startup project. This sort of experience is indispensable and will help you to identify solutions to difficulties which haven’t even presented themselves yet. While some co-founders will be novices, those with previous experience can offer much to a startup company.
Now we know the characteristics you should look for in a startup co-founder, how do you locate them.