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“A startup is like a child and needs two parents. A single parent might get burnt out,” said Aprameya Radhakrishna, cofounder of online taxi aggregator TaxiForSure.
In 2011, Radhakrishna, 32, had just launched his new venture when he fell ill with dengue and was unable to work for a month. His cofounder Raghunandan, 31, a batchmate at the National Institute of Technology, Karnataka, handled the operations. “It could have been disastrous at such an early stage if I was the sole founder and was out of action for a month,” said Radhakrishna.
The selection of the cofounder is increasingly seen as the first important task an entrepreneur faces while starting up, with experts of the view that friendship cannot be the only qualification. “The stress and pressure especially at the time of starting up is very high. The founders should be able to solve problems together; they should work well together not just ‘get along,’” said Mukund Mohan, head of Microsoft Ventures, which incubates technology startups.
For instance, Radhakrishna and Raghunandan believe it is their complementary personalities that make them good cofounders. “Aprameya is creative, innovative and does not think of deadlines. I am good at executing the creative ideas and ensuring that we stick to deadlines,” said Raghunandan, who uses only a first name. The two cofounders expect their company to earn revenue of Rs 100 crore by fiscal 2015.
Venture capital investors said they prefer to back companies with cofounders rather than solo entrepreneurs. “We have encouraged single entrepreneurs to come back to us with cofounders,” said Prashanth Prakash, a partner at early-stage venture firm Accel that has invested in Flipkart and TaxiForSure.
The major reason for this is the difficulty in attracting the right talent at early stages of starting up. “It is easier for a startup to accelerate without much capital and external dependencies if the founders bring in various skills,” said Prakash. As demand for the right partners picks up across India’s startup ecosystem, industry networks are stepping up to help make the connections.
Headstart Foundation, a non-profit focused on fostering entrepreneurship, has created a database, which helps entrepreneurs identify potential cofounders. It now has 600 entrepreneurs registered with it.
Arpit Agarwal, a director at Headtstart, believes it is important to draw up a cofounder agreement that includes each founder’s stake and specifies what happens if a founder leaves. “It is like a pre-nuptial agreement that states how property will be divided if a marriage falls apart,” said Agarwal, who learned the importance of such an agreement through personal experience.
In 2010, he launched a venture to commercialise innovative academic projects. It floundered a year later due to differences with his cofounder. “I thought my cofounder, who was many years senior to me, would leave his job and join full-time.
He however did not want to do that,” said 29-year-old Agarwal, an alumnus of NITTiruchirappalli and IIT-Bombay. As the two cofounders had not set down expectations in writing, there was no commitment to follow-through. But why not go it alone then? Entre-preneurs said often the difficult startup journey gets a little easier when cofounders bring in skills they do not possess individually.
As in the case of 38-year-old Vishal Gupta, a marketing professional who founded an online portal for mycity4kids. As both he and his existing partner, Prashanth Sinha, a former colleague at Aviva Life Insurance, lacked the technology skills to grow the company, Gupta scouted around for a third person.
They soon zeroed in on Asif Mohamed, a graduate of the Indian Institute of Technology in Delhi who runs an outsourced product development venture in Bangalore. Mohamed, who has now joined as a cofounder at the online kids’ service company, was introduced to Gupta by his wife, a referral that proved to be an ice-breaker.
However no matter how long a cofounding team knows each other, differences of opinion and other problems can crop up. Most investors are now pushing for a clear definition of stakes and roles to help deal better with disagreements or break-ups. “Like a spouse, the cofounder has a lot of power over the future of your venture,” said Ambarish Gupta, cofounder and CEO of four-year-old cloud telephony venture Knowlarity Communications.
Gupta, 34, cofounded the venture with his IIT-Kanpur batchmate Pallav Pandey, although he knew Pandey would stay only for the initial years of starting up. The two were asked to create a written agreement when they received venture funding from Sequoia Capital in 2012.
This turned out to be very helpful when Pandey quit as the chief operating officer earlier this year. “My stake was vested. I diluted a small amount at the time of funding and remain a shareholder,” said the 34-year-old entrepreneur. Despite the benefits of partnering, the pressures and tensions of starting means even the best go through disagreements.
Last year when one of the partners pushed for a change in the revenue model of mycity4kids, Gupta said there was a lot of apprehension but the idea was still tried out, as the partners felt it was important to hear each other out. Fortunately for the company it worked out well. “Earlier we had about a dozen businesses signing on each month, now we have 200,” said Gupta, who expects to cross Rs 50 crore in revenue in three years.
Finally, for most, it all comes down to how much the founders can trust each other. “I sleep better at night because I know Raghu is working by my side,” said TaxiforSure’s Radhakrishna.
Famous Bonds
APPLE
Steve Jobs and Steve Wozniak had a third cofounder in 1976 — Ronald Wayne. Older than the two Steves by around 20 years, he drew Apple’s first logo and partnership agreement. He relinquished his 10% stake just two weeks after the founding for a mere $2,300 as he felt the risk was too high. If he had retained his stake he would have earned billions of dollars.
eBay
Pierre Omidyar had created a basic code that would eventually become eBay in 1995. He suggested the idea of an online marketplace to his acquaintance Jeffrey Skoll, a Staford graduate. Skoll initially said the idea was “dumb.” However, increasing sales convinced Skoll to join the company full-time and become its first President in 1996.
In 1995, Sergey Brin, then 21 and a student at Stanford was assigned to show the then 22-year-old Larry Page around the campus as he was considering joining the school. Both bickered through the meeting and found each other obnoxious. A year later Brin and Page, who had joined Stanford by then, worked on a search engine project. In 1998 this became Google, the company.
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