The Boomerang Founder: read this before founding a company

David Cohen, and entrepreneur investor and technologist from Colorado has a post on his blog about the perils of co-founder relationships. I would recommend that anyone contemplating forming a company takes a look not just at the article, but equally at the comments of the people on his blog. It describes a problem very well that we see in a significant proportion of the companies that come to us for funding.

Technology Recruitment in an Early Startup

Daniel Tenner has a great post that is good reading for people looking to build early tech startups. I would just caveat his comments by suggesting that care is needed in understanding how you provide equity to those who help you out in those early steps. Daniel is completely right to suggest:

"You want them to feel that it’s their company, and to do that, you have to give them equity - not options, not promises of options, but actual founder’s equity. Don’t feel like you’re giving stuff away here. If you’ve got the right person for the job, ensuring that they feel ownership of the company will ensure that your share is worth something. It’s better to own 70 or 80 or even 51% of something than 100% of nothing."

However, bear in mind that there are two categories of people you might want to help out with a startup- and both can contribute a great deal

• Ideal hires- people who you would've hired to do the job at the full commercial rate if only you had the cash, and who you'd expect to continue to be perfect for the job in 3-12 months time.
• Opportunistic hires- people who are prepared to get involved early, before an ideal candidate would join, but who are probably not long-term management or key staff.

I would suggest that it is wise to think this through, and to talk it through openly with those involved, and make sure that the equity is allocated appropriately. I have seen many many founders who regretted having shared the company, often 50:50, with someone who ceased to be involved pretty quickly. I've seen founders who've been sweating to make the business work five years from the start, whilst their co-founder holds similar equity and has long since departed. Needless to say these founders tend to regret their decisions!

Updated: Role of Chairman in Pre-Revenue Tech companies

The role of the chairman in RisingStars companies is a little different from the standard in a small company due to the emphasis on growth and support of a growing team.

Updated version, also I've added the highlights to emphasise particular areas that are unusually important in a pre-revenue technology company.

Team Building	Contributing to the management development plan Mentoring and support for the CEO- acting as their private sounding-board Leading the process of recognising when there is a need to change CEO and to lead the search for the new CEO. Making sure that team changes get recognised early and supporting the CEO in taking quick and early action Monitoring the executive team's relationships and bringing action if conflicts arise Monitoring the performance of the executive team and actioning required change Providing discreet feedback and guidance for the CEO Conducts formal CEO appraisal/performance review Assists CEO in selection of exec board members
Financial Governance	Ensuring financial reporting is regular, clear and appropriate Taking a lead role in negotiating remuneration In the absence of a dedicated FD, having oversight of the accounting process Recognising future cash requirements and ensuring the board deals with cashflow planning well in advance
Strategy	Leading on the development of the company strategy Ensuring that investors interests are properly represented by the strategic options presented to the board Mentoring the CEO on the strategic development Being the first to spot a dead-end market entry strategy and to call time on it.
Fundraising	Spotting well in advance when fundraising is likely to be required; making sure there's always 3 months cash in the bank and that fundraising starts as soon as there's less than 12 months of visibility Attending many/most/all fundraising meetings and helping prevent it taking over the CEO's time and to improve the level of feedback. Providing a second voice in fundraising discussions Opening contacts for fundraising and corporate events Providing independent feedback to investors on fundraising comments Gathering feedback from investors on their view of the exec team
Representing Shareholders Interests	At all times to remain clearly focused on the interests of shareholders over management Providing independent feedback to investors on the state of company and management Ensuring transparency of information flow between management and shareholders
Proceedings at Board Meetings	Collects input from all directors and management on the board agenda - this facilitates surfacing difficult issues. Creates the board meeting agenda with the CEO. Ensures report(s) have been issued well in advance of the meeting Runs the agenda of the board meeting, holding items to schedule or extending the time spent on them if the consensus is to spend more then the appointed time on an item. This frees the CEO to focus on content and allows the Chairman to keep the meeting on track. Gathering input from, and providing feedback to, shareholders from the board meetings.