How NOT to Give Away Too Much to the Wrong Person

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Tundra Angels was once doing due diligence on a startup.

As part of the process, we reviewed the startup’s cap table. I didn’t recognize one particular name, as the name had never come up in conversations with the CEO. But, this person owned around 15% of the company.

I asked the founder and CEO about who this person was.

Startup CEO: “This is the person that I originally co-founded the company with. It turned out that we didn’t mesh and collaborate well.” 

Me: “Is this person still active in the company?” 

CEO: “No, they are not.” 

And yet, this person owned 15% of the company.

I wish this was a unique case. But it’s way more common that founders think.

✅ The biggest mistake I’ve seen founders make with potential partners is that they jump in way too early, and/or they give away too much, too early. ✅

My Rule of Thumb:

For each potential partner, founders should be super clear on what I call the “Potential Partner Expression.” Here is “Potential Partner Expression:”