Are You Choosing Your Co-Founder from an Investor’s Perspective?
Investors tend to put their money where they see maximum returns and minimum risk. Founders of a startup also play a major role in attracting an investor. Hence, while choosing a co-founder, you should not only look at factors such as compatibility and value-addition, but also at whether the co-founder would have the ability to attract an investor. Many investors If you want to know more about how to choose a co-founder from an investor’s perspective read on!
Why are co-founders important to Investors?
Founders personify the business by being the chief salesman, future fund-raisers, key name in the official documents, and spokesmen and face of the business. The existence of the business itself relies on the acumen of the co-founders, and it is their vision that tends to guide the path of the firm. When investors invest in a business, they take a huge risk on the ability of the investors to scale up the entity. Hence, it is important for an investor that they place their bets on the right team of founders. This makes the job of choosing a co-founder even more difficult, as now you not only have to choose someone who is compatible with you, but also someone who appeals to potential investors.
How to Choose Your Co-Founder from an Investor’s Perspective?
Risk Factor : An experienced person with a demonstrated history of founding a startup earlier, would be a safer bet than a young inexperienced fresher. Investors too would be more attracted towards a co-founder who brings with himself years of practical experience. Hence, choose a co-founder who poses the minimum amount of risk. The investors tend to be attracted towards those founders who show some semblance of financial stability and have hands-on experience of running or managing a start-up previously.
Diverse Skill Set : Imagine a company where all the co-founders are equipped with technical knowledge and no one knows how to market the product! Such mismatch may cause a startup to fail, even if it has a brilliant and technically sound product. Investors look for a team of founders who have diverse skill sets. Each founder should come with their own specialized skills. Choose a co-founder who complements the skills you already have, instead of possessing the same skill set. This gives across an impression to the investor, that the entity has various experts, each adept at their own field. Co-founders with a diverse skill set also mitigate risks for a start-up and hence, attract investors.
Long-Term Commitment : An early-stage startup is nothing more than its founders, till it establishes the marketability for its product. Hence, it is important that the founders are willing to commit and stay for long. When an investor puts money in a startup, he is taking a bet on its founders. You need to showcase to the investor that you and your co-founder would stay till the end of the company and that the company is here to stay. You can only do so, if your co-founder is 100% committed to the company and sees himself as a part of the company in the distant future as well.
Team-Player : Conflicts among co-founders are a key red flag for investors. Investors would not want to invest in a startup, whose team of founders is not in consonance with each other. Hence, you need to choose a co-founder who is compatible with you and who is a team player. A co-founder who knows how to work in a team setting and who has good inter-communication skills would be an asset to an investor.
Well-Networked : A well-networked co-founder adds much value to the start-up. Having good connections, minimizes the risks. A founder with an expansive network can also market the products or services with much ease. Hence, investors typically want the founders to have a large and wide network of professional connections. This again helps in minimizing the risk.
To summarize, an investor is looking for founders who mitigate their risks and maximize their returns. Hence, choose a co-founder not only from your own perspective but also from an investor’s perspective. Having the right person on board would make your life easier and would also help in pitching your entity to the investor.