Author: JUDr. Jana Nevrlka, LL.M., MBA

Launching a startup is not unlike beginning a romantic relationship, filled with anticipation, shared dreams, and the potential for a lifelong partnership. In the entrepreneurial world, this partnership often comes in the form of a cofounder, who shares your vision and is willing to embark on the rollercoaster ride of building a business from scratch. However, much like in dating, it’s crucial to test the waters before making a long-term commitment. Would you ever consider getting married on a first date in your private life? Very unlikely. The same should be true for your business partnerships.

If you’re a founder considering bringing a cofounder on board, it is beneficial for you to check some of the pointers below.

The Importance of a “Dating” Period

Before you decide to make someone your cofounder, it’s wise to work together on a trial basis. This approach mirrors the probation period often seen in traditional employment relationships and can help both parties assess compatibility, work dynamics, and commitment levels. The goal is to prevent future disappointments and disagreements (and the costs of separating the wrong matches) by setting clear expectations from the start.

Defining the Terms

To ensure a successful trial period with a potential cofounder, you need to set the framework and define the conditions. Here’s what you should consider:

1. Identify What You Need: Before even beginning the trial, determine which skills, resources, and assets you’re looking for in your future cofounder. Ensure that these requirements align with your business plan milestones. Here is a detailed step plan on how to do this.
2. Trial Period Duration: Decide on the length of the trial period, typically ranging from 1 to 6 months. This duration should provide sufficient time for both parties to evaluate the partnership.
3. Set Clear Objectives: Define specific objectives for the trial period. What do you want to achieve together during this time? Which criteria will you look at to evaluate the trial? Typically you want to find out for both parties if you work well together, demonstrate the skills required etc. Spell it out. Simple and clear. It is the best way to avoid any future disagreements and also to check if both parties are starting the cooperation with the same understanding and intention.
4. Exit Strategy: Establish what happens if you decide to continue working together after or during the trial period and what occurs if you do not. This prevents scenarios where one party feels entitled to compensation for work done during the trial.

Not at all an uncommon real-life story

Consider Eva and Martin, who decide to collaborate on a marketplace platform startup. After 2.5 months it became clear, that their idea about commitment and delivery were too different and that Martin was not able to dedicate as much time as was needed by the project. Moreover, did not have sufficient experience with the software to complete his task. They chose to part ways, but a lack of prior agreement on compensation and expectations left them in a challenging situation. Martin wanted to be paid for the 2.5 months of work that he invested in the project. Eva did not think this was appropriate as she was left with an unfinished app that needed a lot more work and now feels like having wasted 2.5 months.

Now, how can you avoid the same thing happening to you?

Create a Practical and Clear Framework

To avoid such pitfalls, use a practical template to outline the framework for your cofounder’s trial period. Very often, it is more the different expectations and assumptions that are not addressed upfront, that cause future disputes. Next to the trial period clear objectives and expectations and exit strategy, you also want to cover the following legal aspects to protect your business:

• Intellectual Property Assignment (IP): Ensure that all IP created during the trial period belongs unequivocally to the project or company.
• Confidentiality: Protect your project’s sensitive information by requiring all parties to treat it as confidential during and after the trial.

When and How to Implement

Start defining the trial period as soon as you begin working with a potential cofounder. While it may seem early, this proactive approach minimized misunderstandings that could jeopardize your business down the road. You don’t need a lengthy legal document; a few page Memorandum of Understanding template can suffice – in writing and signed by both parties of course.

In the world of startups, finding the right cofounder is similar to finding a life partner for your business. Taking the time to “date” your cofounder candidate ensures that you’re both on the same page, setting the stage for a successful and harmonious entrepreneurial journey. It’s a strategic choice that can help you avoid future complications and build a strong foundation for your startup’s success.

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