A Guide to Co-Founding Tech Startups for Non-Technical Executives

Part 1: Make a Decision: Should You Even Co-Found a Startup?

Skip this part if you have already made a final decision.

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Part 2: Gather Early-Stage Startup Experience

If you don’t have startup experience, start by gathering some. This can be done part-time as a side-project or as advisory work. Startup experience will help you better understand what problems you like working on and how to identify high potential startups.

Find Hight Potential Startups

Once you have narrowed down technology, it’s time to find great startups in that space. Look out for a strong team plus proprietary company tech (or process know-how) that can be applied to solve a big customer pain points. As the second step evaluate your personal ability to deliver strong value to this company.

Deliver Real Value

Successful collaboration with a startup is all about proactive value delivery. Don’t wait for the busy startup team to reach out for help. Figure out what are the biggest problems for this company, brainstorm potential solutions and rank them. Prepare a workshop outlining how you could tactically approach each solution. Some of the most value-adding topics include sales and go-to-market, pitch training and general operations/hiring.

Part 3: Get Going: Find Co-Founders and Build Your Team

Find Your Co-Founders

Once you gather enough startup experience to understand what technologies excite you, ideas will start coming to you of problems you could be solving. Write down your top two or three ideas. Its time to start searching for your co-founder(s).

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Number of Co-founders

There is no such thing as a magical number of co-founders, but a few “wisdoms” apply to most startups:

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Equity

Give your co-founders enough equity so that they remain motivated even if the company undergoes dilutive fundraising rounds (which reduce founder’s equity share). Most early co-founders start with at least a 30% ownership. CEOs often have 5–15 ppt more, although 50/50 splits are also possible.

The CEO Title

First, determine who is best suited to be the CEO. CEO’s main role is to set the vision, bring in key resources (e.g. fundraise) and recruit great talent. Then make that person the CEO. End of story. Being a CEO is a full-time job. When CTO’s or CSO’s perform CEO duties “on the side” it typically hurts the company no matter how talented these people are.

Part 4: Get Things Going: Startup Checklist for the First 90 Days

Use this checklist for the main things to get done within the first ~90 days of incorporation:

Select a Legal Structure and Get Business Licenses

VCs are most familiar with Delaware C Corporations. Thus, if you are planning to fundraise you should incorporate as a Delaware C Corp.

Get Your Federal Employer Identification Number

Apply for a Federal Employer Identification Number (FEIN) with the IRS. A FEIN is required to open a bank account or process payroll.

Select a Law Firm/Corporate Counsel

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Open a Company Bank Account

I recommend selecting a bank that understands a startup needs and the fundraising process (for instance the Silicon Valley Bank).

Select an Accountant or an Accounting Firm

Similarly, you want to choose a firm that works with startups.

Key Takeaways

Additional Resources:

Jared Friedman “How to get startup ideas”

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Julia MacDonald

Julia MacDonald

I help founders start and scale tech startups