The relationships between the business founders is key to smooth decision making and running of any business. We have found that groups can form through friendship or study projects who then decide to take their learnings and form a business, especially in the creative digital areas. A number of these teams struggled during their time in the Incubator Programme and many because they just weren't aware of the time requirements expected of them by other founders, or able to fairly distribute workload amongst themselves.
For any applications we receive that contain more than 2 founders, we question deeper during the programme interviews to determine the reasons and motivations for the decision to form a business. This has helped us reduce the number of pre-start drop-outs and pushed the larger businesses to question how serious they are about their venture.
Once a multi-founder business is up and running and has some revenue, we suggest the creation of a Founders Agreement to stipulate outcomes based on specific actions to avoid and clarify situations such as bad leavers, good leavers and share distribution with the aim of the development of a formal Shareholders Agreement (in the case of a limited company) further down the line.
- For any business with more than two founders, question their reasons and motivations for both starting their own business and the makeup of their founder team.
- Recommend to all start-ups that they create at minimum a Founders Agreement and for limited companies suggest a legally prepared Shareholders Agreement.