First you need to decide whether you want to build your business alone or with someone. Majority of start-ups are team endeavour. Competition is getting more intense, technology more complicated and the development of international markets pose an everyday challenge related to the changing environment. In order to cover all aspects of the business you often need to partner up with experts and professionals. So there are some basic criteria according to which one should decide whether to start alone or in a team:

• Expected substantial growth of the business that has the potential for scaling suggests the need for coowner(s)
• Required heterogeneity in skills and expertise required by the particular business, the more demanding is the field (e.g. biotech), the more likely it is that you personally miss some type of key resources: Key skills, experiences, contacts, etc.
• Your personality – are you really a team player?

Other things being equal, companies started by a team of founders are more likely to succeed than companies started by individuals. This is due to the team’s ability to pool and share experience and expertise (Dobbs and Hamilton, 2006). Preferably, the team should cover the following roles (rarely all found in one person): the entrepreneur (who sees the opportunities, often with customer and sales skills), the technician (who knows how to make or deliver the products or services, knows the technology), and the manager (management, administration, staff issues, cash flow) (Gerber, 1986). In all but the simplest of firms, it is rare for people to excel in all three roles. Team members with heterogeneous and complementary industry experiences, educational backgrounds, managerial skills and abilities increase the effectiveness of most businesses. It makes sense to have a diverse team, where the members complement each other professionally and personally. Having an extroverted CEO with experiences in sales and introverted CTO with deep technical knowledge works usually better than having two extroverted marketing majors starting a business outside marketing itself.

Too small a group may lack diversity. However, too large a group may lead to greater conflict and difficulties in coordination. Keeping the three essential skill sets in mind, it is helpful to start with at enough people to cover the core roles described above. It is important that partners are sought which complement, rather than duplicate each other’s skills and abilities in these three areas. Sometimes the product or service is simple enough or one individual is talented enough to cover two of the roles. According to Timmons and Spinelli (2009), it is very difficult to grow beyond a firm with 20 employees and a few million dollars in sales without a team of two or more key contributors.

On the other hand, co-owners should match in their vision and business philosophy. Is there a core vision drawing the team together? Co-founders’ values, growth ambitions, attitude to debts and personal time devoted to the business as well as the expected exit strategy should not, in an ideal case, differ and should help to create a strong unit. You should have confidence in your co-founders and like them as personalities. Do they give you energy during mutual interactions or take it out? Basic areas that you should take into consideration are:

• Motivation – Why are you starting a company? Why you choose to be an entrepreneur? Do you share that motivation with your potential partners? There should be an honest and substantial discussion of the founders’ goals from the new venture regarding financial expectations, career development, geographical focus, etc. It is related to basic values and life situations. If one wants to make as much money as possible and the other wants to have a friendly company climate and help disadvantaged customers, the clash will come soon.
• Ambition – What do you want to achieve with your company? Do you want to build a start-up and sell it to the first good offer or do you want to build a company that you will pass to your children? Do you share that view with your co-founders?
• Time investment – Is it your full-time project or are you working on something else? What is the amount of time you are willing to invest in this particular project? Do you expect to sustain high workload for at least medium term? Talk about this with your future partners. Differing commitment is usually the first source of disagreement. Commitment levels should be made very clear.

• Risk attitude – Is it ok for you to be in debt? What is the amount you feel ok to guarantee as a person? It is good to discuss this before you found a company with your partners. There might come a time when you will need to decide on the investment.

In most start-up teams, some differences in co-owners' expectations exist. In such a case, all team members should be as explicit as possible in stating their expectations concerning future business functioning and their expected role in it. Who will perform the role of CEO? Are there clear roles for other co-founders? Rich communication, both in quality and quantity, helps to find a common ground and to avoid future unpleasant disappointment. Generally, the more information co-owners put on paper (and include in a signed agreement), the better. If the start-up is growth oriented, it usually pays off to get a lawyer early in the process.

The options when deciding on equity sharing depend on whether you want to build a relatively small lifestyle business, where you will be the sole owner, or you want to build a fast growing company with a global ambition. In the second case, you very often exchange equity for experience and money that drive your growth. In the end you own a relatively small – in terms of equity – part of a large enterprise.

You can hire professionals, but especially IT professionals, lawyers or financial managers have very high salaries. In order to attract talent, you might decide to offer them part of your equity as you want to get people engaged, motivated and you do not have enough money to pay them high salaries. But be careful with that. First risk is related to potential deadlocks. If you and your co-founder both own fifty percent share and you then, in some moment in the future, disagree on a major decision, it is a problem. The allocation of equity should be discussed in detail, together with precautions how to avoid deadlocks.

If your ambition is a high growth company, you will probably need external financing to scale the business. You will have to plan equity distribution also for your future investors. Don’t give away equity based on likeability of your co-founders. You need them to prove their skills first. Nice way is to create option program and distribute equity based on the results of your company. In some countries, so called vesting schemes are broadly used.

Vesting scheme protects the business and can increase security of involved parties against some risks associated with a start-up, such as a founder or a key employee simply walking away. Vesting schedule defines when and how the shares of the company, which have been promised for the founding team members, employees and other associated parties, will be distributed. For instance, founders may get their package of stocks at once, with the company receiving the right to get or purchase their equity back, if a founder leaves the company. For instance, the full ownership of shares may occur only after vesting scheme is completed, i.e. after working several years for the start-up. The longer individuals work for the business and help it succeed, the more they gain.

Typical vesting schemes include vesting scheme for employees (often based on months worked in a start-up, with a cliff period), consultants (based on months worked or milestones achieved), directors (similar as for employees, but with potentially shorter time periods), advisors and founders (founders who provide valuable intellectual property to the company, e.g. own the patent, may receive part of the shares immediately).

It is important to balance the attractiveness of the vesting scheme and protection of the business. Finally, there are different legal conditions depending on the country in which the start-up operates. In general, vesting is broadly used in the US or in the UK but gets more complicated in a continental Europe. You might want to contact your local business incubator or a lawyer regarding the specific details. See, e.g. https://www.cleverism.com/set-up-vesting-scheme-startup/ for more information.

There are various groups of people from which you can recruit your potential co-founders. Each has some advantages and disadvantages:

• Friends – you like them and trust them, however if you have no previous shared work experience with them, it is a risky option as their work behaviour may differ from your expectations and you then risk your friendship.
• Family – there is even more trust when compared with friends and usually shared long-term vision, however with close family members (partner) there is a challenge of being together 24 hours per day, with other family members (cousins etc.) you should always hire them based on professional criteria
• Schoolmates – you know them from school, you know they are capable, however you may miss a diversity in your founding team
• Former colleagues and business partners – recommendable source of potential co-founders, you have experience with them, how they work, what performance they are able to achieve, how they behave in a stressful situation
• Experts in the field – well known professionals that you need in order to increase your credibility. Get in touch with them through your network, try to get more of them on board, potentially as advisors.