Why having a co-founder is better for business
Starting any business is a daunting task, which can be made easier with the support of an equally committed, trusted confidant. As the founding team, you’re wholly responsible for operations, growth and legals - it’s often too much for one person to master all these disciplines.
Our research shows that businesses with two founders are 12% more successful in closing a funding round within 90 days, plus are more likely to hit their funding target than those who go it alone.
It’s also not always the case that the more people you onboard, the merrier the journey - our data prove companies with three or more founders will run into different problems.
You can’t be great at everything
Businesses rely on the coming together of different skills and roles. Every startup needs three key people: a domain expert, a product and delivery specialist, and a money manager. It’s unlikely you’ll be an expert in all three of these roles - you'll need someone else to help boost your personal and professional skill-set and split the workload. My co-founder, Laurent Laffy is the domain expert and I’m the product and delivery person. We share the money management. We’ve leaned on each other’s expertise continuously along the way.
If you’re set on launching a company alone, I get it. It can feel good to be in sole charge. But make sure you surround yourself with a reliable team who share their skills and knowledge. Be cautious, though: investors can sometimes view a solo founder as potentially risky, after all, if something happens to you, what happens to the company?
Two heads are better than one
Experienced investors know that companies with two founders often make well-considered decisions, quickly and efficiently. You can bounce ideas between the two of you and because there are only two of you (and not three or more), you’ll reach a decision relatively quickly. This makes your company easier to work with and more likely to succeed and grow.
Two heads are better than one (or many) but only if your co-founder is a companion, not a clone. Bringing together your different backgrounds, experience and opinions means your ideas will multiply and you’ll reach the best solution faster. My co-founder Laurent and I approach things very differently. Whereas I set my sights on rapid growth, Laurent walks me through the associated risks to rein in my over-ambitious plans. We always manage to find a happy middle ground which has been invaluable for our business.
The right paperwork may be a your saviour
With your co-founder in place, it’s important to create and sign a founder agreement. These straightforward documents set out what happens if any one founder wants to leave. They’re a pre-accepted exit plan, which allows the other founders to carry on running the business without litigation. With these agreements in place from the start, your company is protected for the long run, and investors are reassured. They’ll want to know that their investment is safe if a co-founder wants to leave and they’ll need to be certain that your intellectual property belongs to the company, not the leaver.
Founder agreements are so important for startups that we offer them for free - it’s the first thing on our checklist for new founders. With the agreement signed, you can move on to growing your business knowing the venture is protected if your co-founder suddenly wants out.
Three or more founders can be risky
I’ve found that companies with three or more founders often run into trouble. Sadly, it’s common for one individual to start to feel out-of-place or be nudged out by other founders. The more founders you have, the smaller the percentage of company’s shares you each hold - this, combined with a low startup salary, can make it more likely that at some point one of you will be tempted by a senior position at a larger company.
Got an extra person? Get extra peace of mind
As we all adapt to working through and after the pandemic, having the support of a co-founder could make the difference between your business being a success or a failure. Whatever you decide to do, if there’s more than one of you, put signing founder agreements at the top of your to-do list.
