Some of the founders and early startup employees among you might be thinking, “What do bears have to do with growing revenue and hiring?” While I’m not sure whether to respect your commitment to heads down building or to be appalled by your ignorance towards all non-startup related things, I’ll try my best to elaborate.

Many, like myself, who entered the workforce within the last 10 years, have been privileged enough to experience a predominantly bull market. Sure we’ve had our fair share of short-term selloffs, but nothing has felt quite as uncertain and potentially bearish as the state of the market now. The macro environment is heavily impacted by geopolitical uncertainty, from impending rate hikes to foreign conflicts, and the stock market is beginning to bleed in response.

A downturn’s effect on the startup ecosystem is two-fold:

1. Extreme movements in the public market will trickle down into the private markets. Growth stage startups are already seeing the impact on their valuation multiples, as larger firms begin to slash valuations. While this is unlikely to affect the early stages as much (Pre-seed, Seed, even Series A), everything beyond that should begin to feel movement. The days of the common 100–200x multiples will soon be behind us. When we consider that public listings accounted for a majority of startup exit value in 2021, we realize that the incumbents that represent the comparative TAM for many of these startups have been significantly impacted.
2. The rate of new venture funds will slow. The logic behind this is fairly intuitive. LPs in venture funds have diversified their capital among a number of different assets. As their public market portfolios shrink, the weighting of the venture funds in their portfolios grows heavier, and they’ll want to rebalance in response. While the many, many funds that have been raised in the past year will still deploy their capital, we can expect fewer funds to emerge in a bear market.

Let’s not hit the panic button yet. There’s an argument to be made that it’s too early to call it a bear market, but I like to be at least a little prepared. Candidly it’s also fun to imagine all the startups that will die if we enter a recession. For those startups that want to be prepared for the onslaught of the bears, here are some things to keep in mind.

Become Default Alive 🧟

In his seminal essay, “Default Alive or Default Dead?”, Paul Graham describes the ideal state of a company as being default alive. A default alive startup should be able to continue indefinitely if it receives no more funding, assuming expenses remain constant and revenue growth is what it has been over the last several months. In recent years, we’ve seen an incredible emphasis on growth at all costs. As a result, companies have trended towards more aggressive fundraising cycles, often planning for only 1–2 years of runway. In a bear market the availability of fundraising capital will diminish over time, so it becomes crucial that a company is able to sustain itself without a new influx of venture cash.

As Paul prudently points out, VCs will often encourage you to err on the side of over-hiring. When things are going well, this seems on the surface to be a reasonable strategy — there are so many things to work on and you don’t have nearly enough hands. However, this will only work if you have sufficient product-market fit. Without a strong enough market pull, companies often fail to meet their growth expectations regardless of how much they have hired. Instead, they suddenly have much higher expenses and not enough revenue growth to match.

It would be unreasonable to expect a super early stage company to be default alive, but as your organization matures you should expect to move quickly away from default dead. In a bull market, daddy venture capital will come feed you, but in a bear market, you starve because he left for a hotter startup.

Lower that Burn Multiple 🔥

One major KPI you’re going to want to track in a bear market is your burn multiple. Coined by investor & entrepreneur David Sacks, a company’s burn multiple is simply a representation of its burn relative to its revenue growth. The lower your burn multiple, the stronger your product-market fit.

In a similar fashion to a company’s default alive status, it would be unreasonable to expect this multiple to be low early on. However, your company’s capital efficiency should increase as the company develops. If you find that your burn multiple is not decreasing over time, you’ll want to entertain the notion that you don’t have as much product-market fit as you might think. Take another look at your KPIs to determine your areas of weakness; if they all look strong, you probably have the wrong KPIs… because if you have to spend a lot of money to move your revenue needle a little, you have a bad business. This is true in general, but it becomes especially apparent in a bear market.

Don’t overpromise 🤡

I know some of you might find this suggestion egregious. You’ll find it difficult to not promise candidates the world, to not tell them that you’re looking to build an enduring company that’s once in a generation, one that will rocket to the moon, make them rich beyond their wildest dreams, and endure beyond your and their lifetimes. But building a startup is already hard, and it’s even harder when the economy is tanking. If you’re not candid about the success rate and the difficulties ahead, you likely won’t hire people who will stick through the tough times.

As Ben Silbermann, Co-founder of Pinterest, put it in Bessemer’s “Building a startup during a downturn,”

I would embrace the hard things as a screening mechanism for who’s in this thing for the right reasons.

Early-stage startups in particular are rife with feeble attempts at a reality distortion field. The number of Seed and Series A stage companies that tell me they have product-market fit is actually unreal. They use LOIs as indicators of market pull, they talk about how many firms are already interested in their next fundraise, and, my personal favorite, they quote ARR numbers that are extrapolated from incredibly small sets of data. These persuasion tactics might work on the less cynical, but in a bear market, companies will find that this will only increase their churn. In a downturn, employees will become disgruntled faster, and they will leave as they determine the reality of their situation.

Startup churn in a bear market will be higher than in a bull market, so you’ll want to be more measured in your approach to both hiring and communication. If you’re real with your team, you’ll find teammates that are there for reasons independent of the macro environment.

Beware the Burnout ⚠️

Burnout is one of the largest and most underrated causes of startup death. A startup’s journey is always strenuous, and none are immune to the stress of the ups and downs a company will face in its lifecycle. When you factor in public awareness of the low startup success rate, it becomes easy to see why startup employees can get easily disillusioned or depressed. In a bear market employee financials will take a beating outside of the startup as well, so those negative emotions will be amplified.

There’s no catch-all solution when it comes to mental health, but it is important to keep a pulse on your team’s well-being throughout the arduous building process. Team off-sites are a helpful way to alleviate stress and build camaraderie, and some time in 1:1’s can be utilized to communicate early and often about team sentiment.

Seize the Opportunity 📈

Luckily it’s not all dead startups and depressed founders in the land of the bears. There’s a pretty strong argument to be made that down markets are the perfect time for next-generation companies to be built. A byproduct of the increased churn is more people looking to switch jobs, particularly with in-demand roles such as engineers or designers. This means there will be more candidates to choose from, and the truly skilled operators will gather at the most compelling companies.

A startup culling would separate the wheat from the chaff, leaving only the nimble, resilient startups in its wake. If you’re able to emerge from the smoldering ashes of the bear market victorious, then you’ll find that you’ve built a quality, antifragile business. Companies that defined the last decade, such as Airbnb and Uber, were built during economic downturns, and yours might very well be the next standout company.

Some other things I’ve written:

• If you’re thinking of investing in startups but you’re not rich.
• If you’re thinking of starting a company now or in the future.

Follow me on medium (@chongz) or twitter (@chongzluong) for more tech related nonsense.

“Angel investors are often retired entrepreneurs or executives, who may be interested in angel investing for reasons that go beyond pure monetary return.” As is often the case with Wikipedia, this information is directionally correct but missing the whole truth. While historically angel investors have been incredibly high net worth individuals, in recent years we’ve seen many companies innovate in an attempt to democratize startup investing. Platforms such as AngelList and Republic have begun utilizing SPVs (special purpose vehicles) and equity crowdfunding to grant deal flow to what had previously been accessible to only a select group of high net worth individuals, and the meme generation of entrepreneurs and investors has enthusiastically aped in.

During the pandemic I joined these young degenerates in exploring the realm of private markets. In 2021 I saw more than 250 deals (not including equity crowdfunding opportunities) and participated in 11. The average syndicate participation rate on AngelList this year is~4.2%, so my 4.7% is a little higher than normal.

There’s no way for me to tell you so early on how my investments will perform, so I won’t tell you what to invest in. I will instead analyze the pros and cons of small check angel investing so we can establish a framework to determine if startup investing is right for you. Looking back on this past year, here are my biggest takeaways for small check angel investors.

Some Quick Maths 🤓

I’m an Applied Math Major at heart, so let’s use some basic Fermi Estimation to establish some initial context. Feel free to skip this section if you hate math, it is for nerds.

I’m going to list some initial assumptions here, yell at me on twitter if you take issue with these:

• A part-time angel investor can reasonably stake roughly 5% (moderate risk tolerance) to 10% (high risk tolerance) of their net worth on these startup investments. Notice that there’s no low risk tolerance option because… why would you be angel investing?
• Venture Capital works under a power law investment mindset. While there are some key differences from an Angel’s perspective (we make fewer bets and with our own capital), the core principle remains the same. In Zero to One, Peter Thiel suggests investing in 7 or 8 companies. However, this advice was from 2014. In the current startup climate I believe we can increase that range without diluting quality, so let’s assume we want to make anywhere from 10 to 20 bets per year
• Any Angel Investment less than $25k is likely going to be through an SPV, such as a syndicate or an RUV, and occasionally through equity crowdfunding. Syndicates have an average carry of 20% paid to the syndicate leads, not including any setup costs that platforms might charge
• Per Business Insider / Goldman Sachs, the average 10-year stock market return is 9.2%, while the average S&P 500 return is 13.6% annually. We are ambitious kids, so let’s take the higher number as our target to beat
• For simplicity, we’re going to look at a 5-year time horizon. I recognize that for some this might seem too small

Looking at the first 3 assumptions, we can see why this asset class has been historically only available to high net worth individuals. If checks less than $25k were mostly inaccessible prior to SPVs, then taking our highest risk combination with the smallest check size yields us the following equation to determine net worth:

We see that at the very edge of our range (high risk tolerance, low check size) we would have needed a net worth of $2.5 Million to comfortably make a go at Angel Investing. However, with the advent of SPVs, this equation changes:

At a $1k check size, we only need $100k in assets! Note that you still need to qualify as an accredited investor, but when Stripe new grads are averaging $230k a year, there are likely plenty of young tech and finance professionals who fall into this bucket.

Let’s estimate some public market returns to set some goalposts. Over 5 years with a rate of 13.6% annually we need to beat…

After 5 years in the S&P 500 we expect roughly 89.2% in gains. This goalpost assumes no carry, as is the case with… pretty much just RUV’s or Equity Crowdfunding at our check size. Discounting syndicates would significantly diminish the small check angel’s deal flow, so let’s incorporate syndicates into the mix. Syndicates have an average carry of 20%, when we factor that in we get…

Oh dear, that’s a little more difficult to achieve. It appears that if we want to outperform the S&P 500 using small check angel investing, we need to have a 5-year return of more than roughly 136.5% in gains. This doesn’t even factor in platform setup costs — for example, if a syndicate has 100k allocation with an 8k setup fee, we have to add an additional 7.5% to the carry part of this equation. It’s definitely an uphill battle from the start for the small check kids, but we wouldn’t be here if we weren’t up for a challenge. Let’s discuss some more explicit pros and cons with this goalpost in mind.

The Pros 😇

Despite the high goalposts we set in the previous section, there are actually plenty of reasons to invest in startups.

• Diversification of assets 📊

Hopefully I don’t have to explain the above to you, but increasing your exposure to different asset classes partitions your risk and mitigates the size of any one failure, increasing the overall fault tolerance of your portfolio. As a caveat, this ignores the collinearity that your private market assets might share with any other assets you hold, but that is a complex rabbit hole that I am not informed enough to navigate.

• Increased exposure to the startup ecosystem 🧠

One of the lesser known benefits of angel investing is continued exposure to the startup ecosystem. Seeing numerous deal memos, startup statistics, and pitch decks gives you increased insight into the trends in venture-backed companies as well as the monetization/GTM strategies of many startups. If you want to keep your finger on the pulse of what’s hot in tech (definitely Web3 right now), this is one of the best ways to do it.

• Networking & Key Strategic Partnerships 💼

In a similar vein to the above, being an angel investor will often bolster your professional network. I’ve reached out to a few founders I was interested in investing in, and I’ve had great conversations and connections regardless of whether or not I was let into the round. That being said, it’s good to keep in mind that at a small check size no founder cares about you. I already had mutual connections with these founders; without those I doubt I would have gotten a response.

Angel investing is also a good way to build key strategic partnerships. While this benefit is generally more relevant for the founders than investors, strategic angels are chosen for either their connections or the businesses they run/work at. If you’re in the latter camp, it’s likely that you can build a mutually beneficial partnership between your current work and the company you invested in.

• Potential for incredibly outsized returns 🚀

If you’re familiar with venture capital, meme coins, or daily fantasy sports game theory, you’re likely aware of the power law investment mindset. Investors under this framework are investing with the expectation that most bets will be net negative, but one of their bets will have such an outsized return that it will more than cover the cost of the other bets. If you are investing with this framework, then you should have the expectation that every company you invest in could be the next Doordash, Coinbase, Snowflake, etc…

While always true of Venture Capitalists, part-time angels actually don’t need to use this approach (we’re much more comfortable with a 2x return next year than a VC would), but there is definitely an incredible attraction to the concept of incredibly outsized gains. Private markets provide the opportunity to build generational wealth in a relatively short period of time if you make the right bet, while public markets… well there’s always r/wallstreetbets.

• Professional brand and social capital 😎

As Alex Danco points out in his brilliant article on the social subsidy of angel investing:

The real motivator isn’t greed, it’s social standing — just like a century ago, with the original Angels who financed Broadway shows. Angel investing is how you stay relevant. It’s how you keep getting invited to things. It’s how you matter.

While your investment in a startup is illiquid for an incredibly long period of time, your social clout gains are immediate. If you’re not bringing up your angel investments casually in conversation at every party you go to, then you’re missing out on some unrealized gains you can cash immediately. Go straight to your LinkedIn (or Hinge for the truly cultured) and update that description immediately.

In all seriousness, there is utility in having a proven track record of picking winning companies, even prior to the investments being liquid. If you’re interested in breaking into venture capital, small check angel investing on your own can provide some relevant experience.

The Cons 😈

While we have listed some strong pros above, angel investing definitely has many downsides as well, even more so at small check sizes. Let’s walk through them so we can decide if small check angel investing is right for us.

• Shrinking multiples 📉

The current fundraising environment has significantly shrunk multiples on returns (upside). Seed rounds that were once averaging $5M valuations are now seeing medians of around $24M among the top quartile, with prices as high as $50M… and many are arguably pre-product. In B2B SaaS in particular, standard valuation multiples are currently anywhere from 100–200x ARR (Annual Recurring Revenue). It has become clear that in recent years private companies were incredibly undervalued, and the private markets are naturally correcting this.

The conventional counterpoint to this is that exits are much larger now, but this point is diminished when you consider that intermediary exits are less likely to scale proportionally. Companies aren’t going to purchase your $1M ARR startup for $150M. Regardless of what side of this argument you’re on, it is clear to all private market investors that the expected returns have shrunk.

• The private markets have significantly fewer regulations regarding disclosures 😶

It’s almost too easy for a startup to paint an incredibly rosy picture for the inexperienced investor, when in reality the company is a moving bus-fire heading towards a cliff. There’s a reason that platforms such as AngelList make you agree to multiple closing document provisions, including my favorite provision:

I understand that I must do my own diligence, read the investment documents and ask any questions I think are relevant to my investment decision. Company information on the site is incomplete and has not been verified. AngelList, {lead_investor}, and the fund advisor may not have done any diligence on the company. Investing with notable investors doesn’t guarantee any level of diligence has been performed.

There is a 100% chance a startup is not as good as the deal memo and pitch deck make it out to be. Intellectual honesty has always been orthogonal to interpretations of data in the startup world, that’s just the nature of the incentive structure that venture capital has created over the years.

• If you’re not a full-time angel investor, you’re strictly at a disadvantage 😰

This is a fairly straightforward point. Who’s going to win — the person who can spend the hours doing due-diligence on the market opportunity, the founders, and the company’s stats, or the person who skimmed the pitch deck and stalked the founders for 10–15 minutes? All other factors held equal I’m certainly going with the former. At a check size less than $25k, I would not be confident that I could even meet the founder… which leads into my next point.

• At small check sizes you rarely meet the founder 🤡

It’s worth restating that at a small check size no founder cares about you. If you haven’t already met the founders, your deal flow as a small check investor will often not result in a full meeting, and if you do get the opportunity it’s exceedingly rare to meet more than once.

Some might make the argument that with enough hustle, you should be able to prove enough value that a founder will be willing to meet with you. While I agree with this point, this is only relevant for companies where you are already interested in investing. In the decision making phase of small check angel investing, you will not meet the founder. This means all those podcasts you listened to were useless — you won’t be able to sit down with the founder, look deeply into their eyes, and know in the first few minutes whether or not they’ll build a revolutionary company.

To understand how much of a detriment this is with regards to selecting early stage investments, let me give you an example. I had the chance to attend a Sequoia Angel Academy presentation earlier this year, where the partner delved deeply into what they look for in a founding team — authenticity, founder market fit, unique insight, intellectual honesty, resilience, the list went on and on (DM if you actually want the full list)… Someone then asked in the Q&A portion:

If I can’t talk to the founders, what should I do?

The partner stared for a bit, and then, in an almost wry tone, said,

Well you could look at their LinkedIn.

Incredible, I never would have thought of that — thanks Sequoia! Let the LinkedIn stalking begin. In all seriousness, my best recommendation for founding team vetting is to look for lines, not dots. Does their track record suggest personal motivation, accomplishment, or resilience? Do you see context specific experiences that would suggest founder-market fit? Utilize the same harsh judgment you would use when stalking a best friend’s new significant other.

• SPV deals are self filtering for less popular deals at an early stage 🥶

In today’s hot fundraising environment, VCs are scrambling to get into rounds. Securing allocation for themselves, much less a syndicate, is often a struggle. As a result, deals that you see through SPVs are more likely to be unpopular. Deals that are “led by Sequoia” deals or “B2B SaaS… led by David Sacks at Craft Ventures” are rare. That being said, to quote one of the hottest rising VCs Mac Conwell on Harry Stebbing’s 20VC Podcast:

Hot deals don’t mean anything. The deals that matter are the deals that return capital, and every hot deal we know doesn’t return capital.

Honestly, a lot of people just play “follow the leader” in angel investing. The strategy is understandable: lead investors provide the due diligence and the north star that you place your trust in, so when they’re a tier 1 firm you tend to take their word for it. However, keep in mind that in a power law mindset you often want to go against the grain. Fortunately or unfortunately, the carry structure incentivizes investors to syndicate as many deals as possible, both good and bad. So as a counterpoint, gems likely exist just by virtue of the sheer volume of deals… you just might have to wade through a lot of bullshit.

Making an Informed Decision 🤔

Given all this information about the small check angel investing environment, we can conclude that small check angel investing is only appropriate for some specific profiles:

• Risk tolerant individuals with strong networks and a solid understanding of power law returns
• Future Angel Investors / Venture Capitalists looking to gain experience & build a track record of picking winners
• Operators looking to gain insights into the current startup ecosystem
• B2B SaaS Founders and Executives investing in other B2B SaaS Founders

If you are any of the above, then go for it. I believe that most individuals have backgrounds/experiences that should give them unique insight into different problem spaces, and that the more of those people that capitalize on these insights and invest in startups the better.

However, if you are any of the following:

• Professionals looking for asset diversification with more assured profits
• Anyone too busy to read pitch decks with inflated numbers and liberal interpretations of data
• People looking for a way to get rich without putting in the hours
• Individuals with low risk tolerance

Look to place your money elsewhere. Rolling funds are a nicer, lower effort way to give your portfolio exposure to startups. You would be outsourcing the due diligence and betting spread to another professional willing to spend the hours necessary in exchange for a management fee (0.5–3%), but you will have to invest on a quarter to quarter basis and you usually still have to pay 20% carry.

There are other alternatives as well. The ODX Community Fund for On Deck’s Y-Combinator competitor seems like a particularly nice deal, given the valuation at which they invest in, so I personally invested in that.

I do believe that the democratization of private market investing will continue to progress, so the conclusion here might change over time. I didn’t discuss equity crowdfunding too much in this article, primarily because I found the deals to be lower quality on average, but it is certainly interesting from a consumer business perspective. Consumer startups like Gumroad can now align their customers with the company’s own success in a similar fashion to how B2B SaaS Founders secure strategic angels. I’ll be tracking platforms like Republic as they continue to trend upwards.

There are also other promising innovations in the space such as DAO’s (see SyndicateDAO), but the regulatory environment around investing in securities through DAO’s is extremely uncertain. Perhaps another article on that once DAO’s or something similar in Web3 gains more traction.

For those interested in diving into Angel Investing after reading this, here are some resources I found helpful:

• Jason Calacanis Book - Angel
• Jason Calacanis Angel Podcast
• Naval on Angel Investing — Part 1
• Naval on Angel Investing — Part 2
• Paul Graham on Angel Investing
• Harry Stebbing’s 20VC Podcast

For increased direct deal flow:

• AngelList Syndicates
• Republic — Note that Republic also has a Deal Room for Accredited Investors specifically.
• The Syndicate

For indirect deal flow (some of my deals came through these connections) and networking building:

• Fractal
• Gen Z VCs
• On Deck

If you’re thinking of starting a company now or in the future, take a look at my article on Co-Founder Dating.

Follow me on medium (@chongz) or twitter (@chongzluong) to continue listening to me shout nonsense into the tech ether.

Disclaimer: Contrary to the cover photo’s implication, this article is not about dating your co-founder. I do not recommend you do that 💔

If you’ve spent any time in the early stage start-up landscape, you’re probably familiar with Co-Founder Dating. This refers to the process of searching for your startup partner. These rare kindred spirits are entrepreneurs willing to put in the long, sleepless hours with minimal expected payoff in exchange for the minuscule chance of making an outsized impact on the world.

In November 2020, I had just winded down my first startup and was full-time co-founder dating. Over the next 3 months I met with over 60 founders, which is exhausting enough without factoring in that these were Zoom meetings. I took extensive notes on each conversation, which ranged in length from 30 minutes to 2+ hours. After the first few meetings, I realized that it would be prudent to come up with a more objective framework to benchmark each opportunity.

Just as I enjoy asking my dates what they look for in a significant other, I ask all founders I connect with what they look for in a co-founder. When grouped together, there’s a surprising amount of overlap in desired traits. From these trends in conversations, I’ve evaluated the strongest indicators of good co-founder chemistry and success.

In this post, I’ll outline 6 Co-Founder Dating Questions that will help you find your startup soulmate. If you answer no to any of these, answer no to them. Don’t settle, you can do better. You’re a catch, don’t let anyone tell you otherwise.

1. Do you vibe?

“I’m looking for a co-founder I can get fucked up with.”

— Potential Co-Founder & Partner at an A-tier VC Firm 🍻

The founder above had an interesting idea, a good approach, and a strong background. When they mentioned what type of co-founder they were looking for, I had a good chuckle, but it was definitely off-putting. I’m not sure I’m ready to go the distance with someone who leads with getting fucked up as a requirement. Guess I’m lacking that big VC energy.

Also known more colloquially as the vibe check, for many this is the most important consideration in vetting a potential startup partner. If you plan on going the distance with a co-founder, you plan on spending more time with them than any other person in your life — 8 to 12 hours a day, every day, for the next 4 to 10 years. If you don’t enjoy your first conversation with them, you’re not going to make it to the thousandth.

Here are some key questions to ask yourself:

• Am I excited to have a conversation with them?
• Did we naturally go over the scheduled meeting time?
• Do I respect what they have to say?
• Is this someone I can talk to for hours without wanting a Xanax?

2. Does their technical skillset complement yours?

“I have an idea for an app. I can handle the business side, I just need someone to write the code.”

— GSB, HBS, or Wharton MBA Graduates 🐍

While founders will be forced to wear many different hats throughout the startup development lifecycle, each should specialize in their own relevant skills. At a high level, this includes but is not limited to programming, design, business development, data science, recruiting, and sales. Your co-founders should cover your weaknesses — avoid doubling up on specific areas of expertise.

3. Does their personality complement yours?

“Kylie is a Leo and I’m a Libra, and it turns out these two signs are super complementary and good for each other.”

— Kim Kardashian ♌️

There’s little to no chance you’ve made it this far in life without working on some kind of group project, be it a work epic, a university assignment, or a little league team. At this point you should be aware of what type of person motivates you to do your best work.

For example, I’m the type of person who’s fairly easy-going and tends to improvise when necessary, and my co-founder for my previous startup is similar in that regard. While this makes us great friends, it means that when someone needs to step up to define roadmap and planning, we’re both a little out of our element. The improvisers benefit greatly from the planners. Consider your own personality under this lens. Are you a real deep work type, someone who loves to be heads down developing? Perhaps look for someone with the extrovert energy to seek out conversations.

That’s not to say your co-founder should be totally different from you. There are many traits that benefit from alignment: approaches to conflict resolution, taste in hobbies & entertainment, stances on recreational drug use… you’re just Jobs looking for Wozniak (or vice-versa if that’s somehow more appealing to you).

4. Are they flexible?

“A tree that is unbending is easily broken.”

— Lao Tzu ☯️

I’m cheating a little here, this one refers to flexibility on two dimensions. In some contexts, you’ll need to evaluate both, and in some you won’t need to evaluate either.

Are they full-time on the startup grind? Not everyone you meet is going to be in the unenviable position of searching for a co-founder full-time. For those who are thinking of making the leap, it often makes sense to spend some time proving concept before taking a startup leap of faith. I worked on my last startup with two part-time co-founders, to varying degrees of success —avoid this scenario if possible. Part-time co-founders don’t last too long, so in these circumstances, there are a few things to consider:

• What would need to be achieved before they’re willing to take that leap?
• How comfortable are you with them not being full-time, and for how long?

Are they a flexible thinker? The startup road is never straightforward; there are many twists, turns, and pivots along the way. If they have a specific idea in mind, they must be open to inevitably changing the details. You want them to love the problem not the solution. They should have strong opinions, weakly held.

Many potential co-founders you meet will have a set of problems they’re interested in tackling or even a specific product they’re building out. The final two heuristics can be applied for scenarios where the founder is already working on an idea.

5. Do they have Founder-Market Fit?

“Richard, you’re a fucking rock star, okay? You just don’t know cloud, this tiny, little, shitty area, which is becoming super important, and in many ways is the future of computing.”

— Erlich Bachman, Co-Founder of Aviato ✈️

There’s an argument to be made that given enough interest and passion, you should be able to dive into any vertical and become an expert. I believe there’s some merit to that. I think we can all agree, however, that most verticals will benefit greatly from context.

If you’re interested in building a payments and loans application, you have a big leg up if you have a founder with strong experience in the legal and compliance work that surrounds it. If you’re interested in building a recommendation based product, you better have a founder experienced in Machine Learning.

Relevant work experience also has the added benefit of customer empathy. If you’re familiar with the problem you’re trying to solve, then you can better understand the pain points, the willingness to pay, the preferred features, and much more.

For example, my last start-up attempted to solve the existing information asymmetry between influencers and the brands that hire them by building a Glassdoor for Influencers. However, we were working on a product for influencers when none of us were influencers ourselves, nor had we worked in the creator economy before. User interviews were insightful, but even securing those conversations was an uphill battle. A team of influencers would be much better positioned to solve that problem.

Key insights from relevant experience can take a founding team from good to great, so make sure they’re experienced in the problems they’re trying to solve.

6. Do you care about their core problem statement?

“Running a start-up is like chewing glass and staring into the abyss. After a while, you stop staring, but the glass chewing never ends.”

— Every startup founder profoundly quoting Elon 🧠

The highs and lows of a startup come and go so frequently that you’ll begin to question your mental stability. There comes a point where even the smallest of victories becomes the hope you latch onto. If you don’t have an innate belief in the vision your company is trying to achieve, you’re never going to survive those days when a critical employee leaves, you fail to secure a big customer, and every top tier venture firm has passed on your next round.

Some founders you meet will be committed to a specific problem space. Ask yourself if you’re enthusiastic about the space after talking with them. If you don’t deeply care about solving your customers’ problems, you will not succeed.

This is just the tip of the iceberg in the co-founder dating journey. Roughly 20% of the conversations I had met these criteria, warranting follow-up conversations. Those conversations were much deeper dives into their motivations and values, and the considerations there are more complex as you attempt to build trust in their abilities and conviction, but that’s a conversation for another post.

For those looking to increase their pool of potential co-founders beyond their personal networks, there are many useful communities and tools being built to facilitate those conversations. I’d personally recommend Y-Combinator’s Co-Founder Matching Platform or On Deck’s Founder’s Fellowship for high intent prospects. For product and engineering leaders, consider applying to Fractal.

Follow me on medium (@chongz) or twitter (@chongzluong) to continue listening to me shout nonsense into the tech ether.