Would it be considered a bad idea to accept a part time tech co-founder?

It depends on whether the tech component is core to the venture or it is a support to the venture. If it is core, then obviously it is critical to have the tech person as part of the core team.

Investors do not like part-timers. And that’s because, if someone who is core to the project is not willing to dive in fully, why should someone else accept the risks associated with the venture. Also, all businesses have challenges and require the founders to do the fire-fighting on an on-going basis. In the case of a part time resource who is also involved in some other venture, if there is a challenge in both ventures simultaneously, which venture will he/she focus on?

However, there have been instances where a core team member needs some income to take care of life’s expenses, and therefore needs to continue with another job while in parallel working with the startup. In such situations, investors would be OK with the CURRENT arrangement provided the person is committed to leaving the job and focus fully on the venture.

If the tech component is not core to the venture, there may be a bit of tolerance to a part-timer.

Of course, it all depends on what equity you are offering that person as a ‘co-founder’. In some cases, people have given a ‘vendor’ or an expert very nominal, ESOP level equity… but called them a ‘co-founder’ to allow them the bragging rights of the same.

You need to also recognize that shareholding and co-founder status or co-ownership as the promoter are entirely different concepts. A vendor who is offering a service or advice, which is not fully paid by cash but is partly compensated by equity, need not get co-founder status.

 

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Author: Prajakt Raut

Prajakt Raut is the founder of Applyifi.com, and author of the book for startups - ‘Starting Up & Fund Raising’ Prajakt personal goal in life is to encourage and assist a 100,000 people to become entrepreneurs. _____________ Prajakt is the founder of Applyifi - an online platform that provides startups a 36-point scorecard and assessment report on the venture's investment readiness [www.applyifi.com], and helps them improve their odds of getting funded. Prajakt is also the founding partner of The Growth Labs, a platform where growth-stage companies get sharp, incisive advice from senior professionals and experienced entrepreneurs. [www.thegrowthlabs.in] Before starting Applyifi, Prajakt was the head of operations at IAN, founding member of a leading incubator, and the Asia-Director for TiE (2004 - 2007). Previously Prajakt had co-founded Orange Cross, a healthcare services company, and was part of the founding team member of Idealake Technologies. While in college Prajakt had founded a printing business and has spent over 10 years working in leading advertising agencies. Prajakt’s book, ‘Starting Up & Fund Raising’, helps startups understand an investor’s perspective, and helps them improve their odds of getting funded. The book also helps entrepreneurs understand the building blocks of a business.

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