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Investor Fireside Chat with Stephen Price

While many entrepreneurs start their businesses solo, having a co-founder can make all the difference. A co-founder will share the vision, goals, and responsibilities of your startup, and Stephen Price, startup consultant, and Innovation Fellow at Purdue DIAL Ventures joined me at the Angel Club to share the benefits of having a co-founder and how to find yours.

Complementary Skills and Shared Vision

One of the most significant advantages of having a co-founder is the ability to complement each other's skills and expertise. Each person has a unique set of skills and experiences, and bringing different strengths to the table allows you to divide responsibilities and focus on what each of you does best.

Additionally, Stephen says, that bringing on a co-founder can also offer the added value of a new network. “Quite often, you're bringing people on for different skills, different abilities, and different experiences to fill in the gaps, but also the network– whether that be for recruiting, partnerships, potential customers, or an investment, the network is a huge value.”

Emotional and Mental Support

Running a startup can be emotionally and mentally draining, with highs and lows that can be difficult to navigate alone. To Stephen, “The importance of having that emotional support from a co-founder is undervalued and not talked about enough.”

A co-founder is someone to share the journey with, someone who understands what you're going through and can provide emotional support when you need it. This can be invaluable as you hit pain points, and it can help you stay motivated. “Having the pressures and expectations of being the only person building the company is massive, it weighs heavy on the shoulders,” Stephen says. “Having a co-founder doesn't get rid of it, but it does lighten the load.”

Finding your Co-founder

When you start a business with someone, you are essentially entering into a long-term partnership. You'll need to be able to trust your co-founder to make decisions and to stay committed to the company. When determining the fit of a potential co-founder, Stephen shares that there are a few essential questions to ask: “What is their risk tolerance? What is their commitment level? What is their personality, their time horizon, their value system, and their skill compatibility?”

Above all, trust and communication are two of the most important aspects of any relationship, and this is especially true for co-founders. You want someone who you trust, someone who understands the mission, and someone who will “bootstrap to the moon” with you, as Stephen says. “I always have to have people that have got grit and determination because there will be tough times, and you need someone who's going to be there.”

In addition to knowing the right questions to ask, it’s important to know the right places to look. Luckily, Stephen mentions that there are loads of resources that are available to help determine who may be the best fit. “We have mediums like Angel Club, we have Twitter, we have a ton of places where we can go and sort of figure people out, understand their personalities a bit more, before actually even engaging with somebody to have a conversation.”

Splitting Equity

Splitting equity among co-founders and investors can be a complex process. “There is no right or wrong way when you're offering equity for a co-founder relationship,” Stephen says. However, “What's important to consider this early on is dilution. Dilution is important in the numbers, even as early as this. Investors, in general, are hesitant to companies where the founder is diluted.”

In terms of calculating it, Stephen says that “It is ultimately down to you as the founder, and where there is value. It's a percentages game.” Splitting equity can be a complex process, but by considering each person's contributions, roles and responsibilities, and future goals, you can ensure that the equity split is fair and reflects the value each person brings to the table.

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