BLOG – Unlocking the Perfect Partnership: A Guide to Finding Your Ideal Co-Founder – Part 1
“What distinguishes the lucky shots from a proven success formula? I believe it is a repeated success. So when it comes to building a successful business – look for the right answers to successful serial entrepreneurs and experienced investors. The answer that echoes through many of those conversations is the importance of the cofounding team.”
Author: JANA NEVRLKA
The Benefits of a Cofounding Team – part 1
Multiple studies have confirmed that partnerships have a higher chance to create sustainable companies then solo founders. To create faster growing companies. To be more innovative. To be more creative. To be more stable and resourceful.
What are the 3 main reasons why cofounding team might be a better option than flying solo?
#1: Synergies – one plus one is more than two
Done right, there are powerful synergies to be created in a team. Building a successful business requires a combination of skills and resources that are very seldom found under one hat. Being on your own also means that you are always the smartest person in the room and there is no one to check or question your decision. From creativity to innovation, teams produce consistently better results most of the time. Another very practical consideration is workload and capacity.
With joining forces, not only is there a pool of different skills, expertise and strengths, but also a very practical amount of hands who can do stuff. For the ones that get it right, the 1+1 can equal much more than 2.
#2: Shared risks and responsibilities
Emotionally, functioning partnerships provide an additional level of comfort to know that the risks are shared too. And not only that, from motivation to perseverance the chances are that functioning team is stronger than any single individual. Anyone who has been through the journey of building a business knows how demanding it is. An entrepreneurs’ journey if journey full of uncertainties, high pressure and limited resources. Depending on what it is that you are trying to achieve, it can also be full of people telling you that it is not possible. To keep consistently motivated, strong and performing for a single individual is a very demanding task. The benefit of the team is that, combined, the chances are there will be always someone in the team who will be able to keep the motivation as the going gets tough. Combined perseverance is the key! Entrepreneurship is really a hard choice. And there are no success stories without going through some tough times. And, strong teams can handle these typically much better than strong individuals alone.
#3: Investors preference
From a potential investor’s perspective, team versus solo founder is a very important aspect they look at. If all their investment is hanging on a solo founder it is by definition much higher risk than if the venture is backed by a strong team.
The Benefits of a Cofounding Team – part 2
Your cofounding team and the set up around it (including equity split) is very likely the most important decision you are going to make about your business and one of the most important defining criteria for the future success or failure of your business. It is also the aspect that will largely determine the capability of your business to raise external funds.
So is there a magic success formula?
I am very sorry to disappoint you, but there is no magic formula for successful cofounding teams. There are however some helpful guideposts:
# 1: Nr. of cofounders
Typically, recommended cofounders number is between two and five. Important criterion is starting from the needs of your business – and you should have all the essential resources your business needs (human, intellectual, financial, social) ideally within your cofounding team. On the flip side – every cofounder does increase the complexity of managing and setting up your team exponentially – so as much as needed, but not more than that.
# 2: Diversity
Diversity helps team to be more creative, innovative and make better long term decisions. Diversity includes different backgrounds, education, culture, gender or other. You need to think what type of diversity is beneficial for your business (considering your target customers, ecosystem, partners, suppliers) and also realise that the down side of diversity that your decision making process is likely to be slower (then when you are all very similar) but better!
# 3: the right set up
Once you have the right cofounders number and mix – the success key is the team set up – from alignment of the cofounders (business purpose and values), allocation of roles and responsibilities, setting cofounders milestones and performance, defining commitment and contributions up to equity allocation and recovery.
It would not be a full picture though if I would not mention that – even though behind majority of successful business are cofounding teams – it is not easy to build them! Unfortunately, about 70% of business partnerships fail because of cofounders’ issues. So as much as I do recommend partnering up, I am also a very strong advocate of doing it right.
Are you also thinking about starting your own business?
Apply for the next edition of our acceleration program and meet potential co-founders for your own adventure. Find more information here and start your journey with Bluelion now!