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The chicken and the egg dilemma w/ regards to tech cofounder and funding?

I'm finding that potential technical cofounders can only work with funded startups (or want money to help build the MVP). However, investors don't invest until a company has an MVP that has demonstrated traction.

I'm left wondering if I should be teaching myself how to code (already in process) or dedicating my time to finding that person that will also be willing to start without pay (several months lost on this already).

Does anyone have any suggestions on how non-technical cofounders get beyond this challenge?

29 Replies

Ray Sturm
2
0
Ray Sturm Entrepreneur • Advisor
Co-Founder and CEO at AlphaFlow
I'm doing the same, Kurosh, and if the right person NEEDS some minimal cash flow to get involved, my plan is to raise a micro round from a few angels at a lower valuation to get to MVP. While I'm not eager for that sort of raise, if you find an awesome person who just happens to have cash requirements (if legitimate, vs just wanting to keep up a lifestyle), I'd rather do that than lose them.
Bill Kelley
2
0
Bill Kelley Entrepreneur • Advisor
Business Mentor
Ray's solution is a good one: it can be done as a 'bridge round' in which the stock ownership converts at a favorable (founder) rate into options. Usually vesting at 125% will be attractive to an angel. It can also be done as a 'bridge note' in which the investor has the choice of taking 125% in cash or options.

At this stage, of course, it is such a high level of risk that most entrepreneurs look to friends and family.

Of all the positions to fill at the start, I find the CTO candidates to have full dance cards, so it is not unreasonable to expect they will want compensation. The best candidate will buy into the vision and opt for a mix of equity and cash...
Bryan Griffiths
0
0
Bryan Griffiths Entrepreneur
Software Engineer / Game Designer / Instructor
Part of the reason why you are seeing this, is the high demand for technical people. Manysoftware engineersmake $80-100,000 US at common level jobs. So getting them to work for free is pretty much impossible. At least that has been my experience in North Americawhen dealing with a range ofstartups and AAA companies. Bryan GriffithsSoftware EngineerInstructor of Video Game Design and Development
Neha Parnandi
4
0
Neha Parnandi Entrepreneur
Founder, Product at CareForMe
I can tell you what is working for me. It's not perfect, but it is working. I faced the same problem - no funds to pay someone and obviously no one will invest in "just an idea". Two things need to go on simultaneously - finding team members and building the product so that you're not wasting time. I started with validating the market, some competitive analysis, a business model canvas. I then proceeded to write the specs of the product, draw wireframes using balsamiq. I bought a domain and bootstrap template. I hired someone on elance for a few hundred bucks to make a few simple things work. In the meantime, I found someone on meetup.com who is a student software developer. It has been a few months and he is developing the site with me. He is not really my tech cofounder but an integral part of my team. I really like working with him. Developers would probably be more interested in working with you after seeing a prototype. I keep reading articles about the perfect cofounder relationship, how we must absolutely find someone etc but what if you can't find someone immediately? Are you willing to wait endlessly? I'm not convinced about that approach.
Dominic F. Tarantino
0
0
Dominic F. Tarantino Entrepreneur
Account Executive at New Horizons Learning Group
Kurosh,

A quandry indeed. It all depends on when you want to execute and how much time you have. I have been working on a concept for 2+ years now and have gone through two candidate teams that were willing to join me for equity. I was lucky enough to fund the construction to arrive at a working prototype, too. Of course, the two teams fell through as they found opportunities to land good paying jobs even though they loved the concept. No harm no foul there. I understand. Having said that, it may take some time to find the right person who shares your vision and is as equally as enthusiastic about the product. Otherwise, continue to learn new skills, that doesn't hurt, but my fear is that a newbie (being yourself, with all due respect) in software engineering is probably not going to be fit to take your product from prototype to live and then to scale. Most of the time, non-technical founders are forced to make tough decisions about equity and you must know what you're willing to give up and why. Nevertheless, if you have options and you have the patience to wait it out for the right partner, you will benefit in the long run. Sometimes it's not always about just finding a capable engineer, but someone that you vibe with and that you can imagine working with for a good amount of time. Think strategically, too. Search for partners that can do more than just engineer a concept for you, think about your long-term business goals and how that can be achieved to mutual benefit. Then you will have a lasting partnership, if possible, that is not attenuated to just a transactional working relationship.




John Anderson
0
0
John Anderson Entrepreneur
Senior Mobile Developer at Propelics
I've noticed this problem happen over and over. I started building www.ti-browser.com to help make hyper-realistic UI demos. There are so realistic that it looks like an actual app. Depending on what you need, this could give you a 100% Native MVP to show investors how the final product will look and act, without putting tons of money into it.
Rachel Zheng
1
2
Rachel Zheng Entrepreneur • Advisor
Business Development Manager at Honyee Media

There is actually this exact discussion already http://members.founderdating.com/discuss/2577/Learning-to-code-vs-finding-a-true-tech-cofounder. Really helpful and important to do a search before you post - the FD community is already talking about a lot of the issues you're probably having.

Oleg Sharov
0
1
Oleg Sharov Entrepreneur
Mobile Products Consultant
There are 2 ways of doing it:
1. If you are great at selling your idea, then you will be able to get a technical co-founder and most likely have a pretty even equity split with him/her;
2. If you have expertise in one area related to your idea, use it to get a friends and family round to built a basic product ready for a limited public test. This way you will be able to a) pay for development and b) release a product to get traction and c) raise a subsequent round of funding. Then in 12 months sell the company for a billion dollars!
Lane Campbell
2
0
Lane Campbell Advisor
Lifelong Entrepreneur
I have a great idea, its for a flying car. Everyone in the developed world will buy one if we can price it at $400 USD. Would you invest?

In a nutshell that's what your idea is to an investor or a developer. An idea. It's on you to make it more than that.

I can't tell you what works for everyone but I can tell you what has worked for me. There were a bunch of missteps along the way and I spent a bunch of my own money on an offshore team before finally doing it right and recruiting in North America. I have built and sold three service companies in the last six years but I am shifting to building a company around a platform. I have a background in consulting for technologies like IP Transit, Telecom, Enterprise Storage and Virtualization. I don't talk the same kind of tech as software developers but I know they are highly rational people who value their time. To attract the right kind of co-founder I needed I built a company around my idea. I used Vesting Schedules to ensure everyone is actively participating in the growth of the business. Here is what worked:

First, I found non technical co-founders who shared my vision. I started with someone who at the time was a partner of mine in another business, they are an amazing salesperson. Together we sold the idea to four companies in the states and one company in the UK. I expanded from that co-founder to bring on a CMO (Chief Marketing Officer) who gets growth hacking, a CFO (Chief Financial Officer) who has built and sold his own financial company, and finally a CPO (Chief Product Officer) who has over 15 years of experience in the industry and loves our idea.

Second, I brought on advisors to our advisory board that are highly regarded experts in our industry. People who are well regarded, who are published and most importantly know a ton of others in our industry who can help us grow explosively when we are ready for market.

Third, I brought highly regarded development experts to our board of advisors, folks who are on the core team of popular open source technologies we will be using or are contributors.

Fourth, we applied for all the startup programs we could that don't take equity. Most give you some type of credits for their service/product, access to their engineering teams and allow you to state your associations with the company. We got into every single one of the programs we tried to get into.

Fifth, I leveraged my network to get introduced to investors. One agreed to invest in our company after we launch the platform.

Six, I recruited for a CTO to join the team to help us build the product. It took three months, I interviewed over 200 people. We had five candidates who agreed to help us build it. The developer we went with to be our CTO has plenty of experience and we are confident in his ability to lead us to ship the product.

In summary, my unproven method (we haven't launched yet so it's not a proven model) is that you don't try to raise money or build the product till you build the company. If you attract great people to the idea then others will want to join you and in the end you can build a great business.

/my2cents
Rob Gropper
1
0
Rob Gropper Entrepreneur
Director at PetHero, SPC - Member at Eastside Incubator - Principal at Tuxedo Technologies Group
There's a good discussion going on another FD thread about a potential solution....



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