One of the most famous ideas globally is entrepreneurship. Most people dream of starting business ventures that they believe will flourish. Currently, the idea of entrepreneurship drives most people around the world, especially the youth. It is encouraging to see people enthusiastic about establishing their businesses.
However, you should know that beginning and running a business is not easy. Notably, when a business is established it can involve a founder and sometimes a co-founder. The guide provides the differences between a founder and a co-founder.
Founder vs Co-founder
Definition of founder vs co-founder
A founder refers to a person who established or founds something This term is usually used in the context of startups and businesses, whereby the founder is someone who establishes or founds a startup or business.
The founders can establish an idea on their own or they can receive help from others. For instance, the founder of Google is Larry Page.
In contrast, a co-founder refers to someone who helps the founder to establish a business or company. In other words, the term could imply that the co-founder assisted the founder in generating the idea of starting a company or a business.
For instance, Mark Zuckerberg came up with the idea of establishing Facebook while he was at the university and he limited the access to this social media site to students at Harvard University.
Despite that Zuckerberg had a desire of expanding his Facebook business model. Therefore, he requested his fellow students including Chris Hughes, Andrew McCollum, Dustin Moskowitz, and Eduardo Saverin to assist him in expanding the idea.
The four individuals undertook critical responsibilities which make them be recognized as the co-founders of the platform. In this case, they assisted in facilitating the idea regarding what the business or company should be and the services or products they intended to provide.
If the founder establishes a business with other people, they both become a co-founder and founder. For instance, Larry Page is not considered as the only founder of Google but a co-founder with Sergey Brin.
Therefore, the term co-founder exists to provide equal credit to several people who begin a business or an idea together.
Resource mobilization and management
In most cases, the co-founder has resources and skills which can assist the founder with their business and idea. In this case, the co-founder might provide capital and resources or offer only their skills when starting the business.
Depending on the startup or business, a co-founder might be web developers, venture capitalists, hackers, engineers, entrepreneurs, web designers, an existing company, and others who can help their expertise to an organization.
On contrary, a founder can be referred to as an entrepreneur or a philanthropist when it comes to a charity or non-profit organization.
After setting up a business, the co-founders and founder might run it and act as the business’s heads of their respective department, chairman, CEO and sit at the company’s board of directors. In other cases, they can appoint other people to head the company as the chairman and CEO.
In some cases, the founder and co-founder can sell the business, get their business and leave the buyers to run on their own.
The ideal number of a founder vs co-founder
When it comes to the number of co-founders that a business should have, there is no wrong or right answer. For instance, several successful businesses have as low as two and as many as 10 co-founders.
Every business has critical skill sets which are required to enable it to function well. It can need a business person and two different skill sets of engineering or it can require a business person and an engineer.
In most cases, having two or three co-founders is adequate for the business. However, two co-founders are the most ideal when it comes to the perspective of management.
Although three co-founders can be okay, in most case, it can become crowd especially when the business hires new management and the founder begin to make critical decisions.
On contrary, for people who wish to start their ventures, the idea number of founders is two but it can also be one or three.
Most importantly, the number of founders should promote low drama at the workplace, not contribute to issues when it comes to fundraising, and be few such that they have adequate equity even after they have conducted numerous fundraising activities.
Although most of the successful companies in the world have been founded by only one person, there are huge risks. The risks range from the ability to grow the business and technology simultaneously, lack of access to capital, and burnout.
Since the founder will do everything before launching the business, they might find it challenging to get new customers while establishing their products.
Title in the business
Founders will always retain their title. However, the co-founder might retain other titles. For instance, if a person came along a little later but still before hiring the first employee, they can be treated as other co-founders.
However, when adding a co-founder hiring the employees, it can become tricky as employees might feel despised because the newcomer will receive a higher rank and level of respect.
Therefore, if one wants to ensure that the company moves forward, they can offer the co-founder a title that matches the ideas they are bringing to the business.
For instance, they can be made the President of sales, head of content, or Chief communication officers. Therefore, the business will focus on their skills without regarding them as not being co-founders.
A co-founder does not imply that the person will manage or run the business. Although one can have a principal role in establishing the business, the person might lose the role in the future. Also, one might leave the company at any time and still be considered as the co-founder.
Arguably, when operating a business, conflicts will be inevitable. The founders are human beings and will have slightly different skills, tactics, and goals than the co-founders. For instance, Maghdad Abbaszadegan decided to part ways with his startup (Feel Free) due to co-founder conflicts.
Such a case implies that they will not have any formal agreement when it comes to a single founder. However, when a company has a co-founder, it will be required to have a formal agreement between the associated individuals.
If a business has a designer who has an established all the branding, they will own all the outsourced work but they might not have started the original business idea.
Depending on the agreement that exists within an organization, the founder and co-founder will execute different roles. Some of these roles are highlighted below.
Check out, Top 24 Qualities Of A Good Entrepreneur
Founder roles and responsibilities
1. Initial funding
During the early stages, startups do not have a designated financial officer and the founder has the responsibility to maintaining the finances of the business.
Startups also need an extensive amount of capital during the development stage and the founder has a role of ensuring that the new venture meets its cash needs and has adequate cash to sustain it in the future.
In other words, the company’s founders provide the initial funding so that the business can start to operate. The funding can mean applying for financing or loans, using their assets, seeking venture capital, applying for grants to fund the initial business costs until the business starts to earn adequate revenue.
Therefore, the co-founder has full responsibility for the failure and success of the business.
2. Recruit the executive team and employees
When starting a new business or company, the founder has the responsibility of assembling a team that will effectuate its vision. That usually starts with an executive team who can oversee the most important aspects of the company and help employees who are responsible for product execution and delivery to the consumers.
3. Develops a business plan
Successful businesses start with a profound business plan and in most cases, it is the responsibility of the founder to make sure that the business plan has been established.
An effective business plan will include critical aspects such as executive summary, market analysis, description of the business of the company, products, and services the business provides, sales and marketing strategy, operational plan, and a comprehensive financial plan.
If the business has a founder and a co-founder, both of them will collaborate to frequently monitor the business plan.
In the business plans that were developed by another persona, the founder will be required to constantly engage the developer to know what has been achieved.
4. Establishes Vision and mission
Startups are usually established from a specific product service or ideas which the founders wish to provide to the prospective customers.
Apart from determining the products to provide, the founders have the task of determining the vision and mission to keep the team members and employees aligned and on the same page concerning how best they can serve the clients.
One of the most critical responsibilities of a founder involves establishing a responsible team and leading them into success. As a leader, the founder will be expected to act as a role model for the entire organization.
In particular, the founder has to maintain morale during times of distress, delegate duties, and resolve conflicts. Most importantly, the founder should be confident with their idea and team.
The founder interacts with potential industry leaders, partners, suppliers, customers, and investors who can assist in building the image of the organization, gain insight and recognition into unexplored markets.
Startups need intensive marketing campaigns to start their business. In this case, the founder is expected to be aware of the current trends in marketing and advertising.
Therefore, they should manage to identify the appropriate target audience and marketing channel for their products.
When it comes to marketing, founders consider critical aspects such as discounts, sales promotion, events, SEO, social medial postings, and writing content.
8. Customer service
A founder interacts with their customers to collect insights and feedback from the perspective of the customer. Through that way, the founder keeps track of how product offering has affected the consumers in the market.
Most importantly, it provides them with a real-time outlook of the performance of the company.
Roles and responsibilities of a co-founder
1# Identifies market opportunities
Before a product can be presented into the market, a co-founder identifies the areas or opportunities where consumers might need or want a product that does not exist.
A successful co-founder will have a broader view of the market industry or segment, identify what is working and what is supposed to be addressed. After that, they determine if the market presents a chance to create and grow a successful business.
2# Manage product development
A co-founder plays a critical role in developing and implementing a product. During the early stages of a startup, the co-founder will undertake the active role of establishing a product and determining the specifications, and ensuring that the product proceeds to production.
This role of a co-founder requires hands-on skill and successful product development will determine if the new business will be successful.
3# Marketing and promotion
Co-founders have the responsibility to conducting early product marketing and promotion.
Before launching a product in the market the co-founder will be required to network and establish anticipation for the products to make sure that there is adequate demand after the product has been produced.
The part of the job can include attending industry events, crafting press releases, and establishing a social media presence.
4# Develop financial estimates
Co-founders have a responsibility to designing financial estimates and setting timelines and milestones. A co-founder will estimate the costs to bring the product or service to the market, sets budgets as the business grows, ensures long-term solvency, and designs financial plans to determine the break-even points.
Part of this role might involve helping the founder to seek additional investors and funding for the business.
A co-founder might be part of the team that drafts the business mission and vision or they might be introduced into the team during the early stages.
You may like:
- Why Do Most Tech Startups Fail?
- How Much Does a Small Business Make in the First Year?
- How to Be an Entrepreneur without an Idea
- 10 Difference Between an Entrepreneur and an Intrapreneur
- How to Overcome Entrepreneurship Failure
- How do Equity Investors Get Paid?
- Work-life balance tips for women entrepreneurs
In other words, the founder might have already established the business vision but since they lack certain skills, they can request the help of another person who will act as the co-founder.
For instance, a founder might have excellent engineering skills but lack design skills. In such a case, they benefit by looking for a technical founder during the early stages before launching a business.
Bijay is an entrepreneur and start-up founder having more than 14 years of IT industry experience. He is the co-founder of TSInfo Technologies, a SharePoint development company.
A dedicated professional and very passionate about public speaking and also wrote thousands of technical blogs in various technologies. He also wrote a lots of blogs on entrepreneurship, investment, startup, business, manage money tips, etc.