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June 23, 2016

Who Is Your Co-Founder Really?

Credit Background Checks

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It seems like everyone and their grandmother has a startup idea these days. From Silicon Valley, California, to Silicon Beach, Australia, everyone is hoping to create the next Facebook or Snapchat, make a billion dollars and retire to the beach.

Big dreams are great, but this business trend also means that deals are made quickly, often without too much attention to detail. It also means that for every successful partnership, there are at least a few co-founder horror stories. If you’d rather avoid being another one, there are a few things you should do before you rent that house on the beach, move into that incubator, or put that co-founder’s name on your letterhead. Here are a few good tips for co-founder due diligence:

  • Get real-world references from relevant people. While your potential co-founder may not be your employee, it doesn’t hurt to speak to former employers or clients (in the case of a potential co-founder who has been freelancing). Work ethic is one of the most important things in a startup environment, and you don’t want to partner up with a diva or a slacker!
  • Run a credit and background check on your potential co-founder. While they don’t have to be independently wealthy, a large amount of debt can be a red flag, and a criminal history might also make your prospect a risky one.
  • If you’re hiring a technical co-founder, make sure they have the educational background or engineering chops that the job demands. While it’s true that many great programmers are self-taught these days, they should bring either a relevant qualification or a killer portfolio to the table. In the case of the former, check their educational references. It’s not unheard of for people to fake it till they make it!
  • Don’t ignore things like tax. A co-founder who is on the bad side of the tax man could land your startup in hot water before you ever get the chance to take on the world.
  • Many people in the technology world are serial entrepreneurs who make several attempts at success before they finally make it big. Make sure that your potential co-founder isn’t tied to any of their previous projects, or if they are, that you’re legally protected from any potential problems related to them.
  • Finally, have a cast iron, clear and watertight legal agreement drawn up. Handshakes and gentlemen’s agreements have no place in technology startups, and you want to have everything from responsibilities to nondisclosure agreements and ownership shares written down, signed and legal before you partner up with anyone.

Technology startups are here to stay, and they are, in many ways, creating the future of the business world. However, while they may be cutting edge and changing the world, they are still businesses, and they still demand a high level of attention to detail and due diligence.

If you’re hoping to be the next Zuckerberg or Spiegel, don’t overlook credit and background checks, and hire a professional to make sure you’re operating with all the relevant information. It’s absolutely worth the time and investment.



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Many countries will not provide official government responses. It is your responsibility to confirm if our reports are acceptable and AIS makes no warranties of their acceptance.

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