From time to time, I get an offer to join a startup as a partner. I have yet to find an offer good enough to lure me into an agreement. But why?
Here are the key points I would like to see in a new startup.
A real need / problem. Best ideas come from real needs. If the idea is forged around a meeting / dinner table, I find it hard to believe. If the idea came from a real need or problem of a real human being, it is usually a good sign.
A potential market. What is the number of customers we are targeting? Are there competitors in the market? If yes, are we going to build something 10x better than them? If there are no competitors, there might be a good reason why not – needs to be investigated.
Good people. The initial team of partners / managers need to be experienced & agreeable enough. Instead of teaming up with business rookies and endure their mistakes in the learning process, I would rather team up with pros who have been around the block a couple of times.
A reliable financial model. Who is financing the startup? How will the customers pay, how much, when, and why? Is the income sustainable? Are the risks reasonable? How does the ROI look like? Would someone be interested of buying this company someday? Are potential legal issues covered?
An initial crowd. Nobody wants to be among the first 10 users of a service. The startup needs to have a plan to build its initial crowd of users.
Ethics. Is it going to be a win/win for all parties involved? Is the idea ethically correct? What good does it do to the rest of the world?
Fun. Enough said.
Me. Finally; I would ask where I stand in the big picture. What is expected from me? How much time / money do I need to invest personally, and am I able to? The required investment should correlate to the fulfillment rate of the points mentioned above. This means, if the startup doesn’t make sense to me, I would invest only a certain portion of my time and charge for it; like a freelancer. If I believe the startup to death, I could be willing to make it my full time occupation.