Is Your Potential Co-Founder Already in the Bonus Round?

bonus round execFor years I’ve helped friends and former business colleagues with their job search.  If I find out they are thinking about working for a startup or early stage company, I usually talk to them about the various attributes of a bonus round CEO in case they come across a company that has one.  What’s a bonus round CEO?  It’s simply a CEO that’s already made his/her retirement money on a previous venture.  And the more they made the more into the bonus round they are.  Sometimes, but not always, bonus round CEOs are willing to take much more risk.  After all, if the venture doesn’t work out, they’re already set for retirement.

So what about having a bonus round co-founder?  It could be great given the extra been-round-the-block experience.  The main thing is to understand the following things:

  • Were they a founder for the gig that put them into the bonus round?  In other words, have they been around that part of the block?
  • If they already have a fat retirement in the bag, why do they want to go through the drudgery of doing a startup gig?  Sometimes, bonus round types feel like they have to prove the first win wasn’t just luck.  Other times, they tried moving into a semi-retirement phase and realized they were made to build companies.  And sometimes they came into the winning venture after it was already established but always had a dream of doing a startup.  Whatever their reason, you’ll want to know.
  • Do they understand that they might be willing to put the company into more risky situations than if they hadn’t already made their money?  Do they realize that some aspect of this could be good but sometimes it’s either unnecessary or crosses the line for the amount of risk the other founder(s) or employees are willing to take?

There’s almost certainly more good than bad from teaming with a bonus round co-founder.  Just add the questions above to your due diligence list before you make your final decision.

See my related blog article titled “Avoiding Co-Founder Conflict“.

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Author: Gordon Daugherty

Over the past 15 years Gordon has seen more than 1,500 startup pitches, given personal advice to more than 500 entrepreneurs and been involved with raising over $45M in growth and venture capital. Throughout his 28 year career in high tech, Gordon has two IPO’s and a $200M acquisition exit under his belt. Now, through his advisory practice called Shockwave Innovations and as Managing Director for Austin’s Capital Factory startup accelerator, Gordon’s focus is purely on educating, advising and investing in tech startups.

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