Can one startup be a technology provider and act as a co-founder in another startup?

Szymon Stasik Software Engineer, Founder

September 27th, 2018

There is a startup with a business idea looking for someone to become a CTO and be responsible to build a product. They found a person who is starting to build own B2B SaaS generic solution and is offering to build first instance of a software to the other startup.

Are there proven models for successful cooperation?

William M. Digital Retention Lead | CX Empathy Strategists | Copywriter

Last updated on September 28th, 2018

Short answer: Yes.

Long answer: Yes (but I was afraid you'd ask...)

What you're getting at is refereed to as a 'Co-Technical Relationship'. In short it means that the executive operating practices of company [A] work along the 'technical operating guidelines' of a partner company [B] and not a sole individual. It works great because both entities have clear, constructed goals (and aligned visions- obviously) to better each other as a whole.

Plus, the company "brand" that is assuming the role of acting CTO will have vastly more resources at its disposal during both the seeding stage and accelerator stage.

There are only two, tiny problems...

1. Accountability

2. Investor involvement

The first is ensuring that, although this 'B2B SaaS generic solution' company is playing the role of acting CTO on behalf of company [A], you still need someone to step forward and assume accountability when things don't go in the interest of both companies (or worst, the scale is tilted in favor of company [B]).

The second is making it very clear to any current or future investors that this CTO-robot-company plays an active role in the structuring and overall direction of company [A]. Investors might not know anything about this other company and be extremely hesitant to invest in (either) because, well.. obvious reasons that I could go on, and on, and on about.

Just tell company [A] to have a strong 'Exit strategy' if company [B] goes to hell. Remember that the advocate assuming the position of CTO has company [B] and their intentions at heart first. If the ship goes down, the resources will be split and both sides will fight to save their own business.

Hope this helps,

I hope you kill it,

Cy Talladen Cofounder, programmer

October 4th, 2018

ill tell you a story from my freelancer days.

one day a well-spoken gentleman approached me about his "next big idea" and we soon agreed for me to provide the technology for him ( a small mobile app prototype ). He was satisfied with it, and we proceeded to move forward as outlined in the contract. But while I was waiting for him to make payment, he started making more demands, and even backtracked on his satisfaction on the progress made so far. In the end, the contract was not honored and in exchange for my time, effort, and late-nights, I was left with a few lessons:

1: The contract is easily and conveniently ignored in the beginning but takes center stage in the end.

2: You have to exercise good judgement and a bit of intuition with the other party before spending resources, time, and energy on any activity, in order to ensure that they are in-sync with the outcomes and more importantly that they are involved and committed during the hard times. If they are unavailable during critical moments then that is a red flag.

3: Level of commitment can be tested. I recommend a regular test of commitment on their part.

Chowdari Babu Founder @ ismac.io

September 28th, 2018

It's possible if 100% dedication comes from tech team

Senthil Kumar CTO & Co Founder of Beauty Connect Inc

September 28th, 2018

Setup the technical team need more brainstorming for better output..

Szymon Stasik Software Engineer, Founder

September 28th, 2018

I am not sure how to discuss the topic here - so - let me do it in form of question.

How the make the non-tech startup feel safe about the CTO startup will do their job - and not focus more i.e. on other new customers (i.e. possibly better performing/paying)?

Revanth karthik Cofounder @ a startup in stealth mode

Last updated on October 2nd, 2018

Too risky, too many ifs to be satisfied. I'm not saying its impossible. For a startup, the most important quality in the team is the spirit/motive, in my opinion. he core team member's interest/focus is divided, even with their best intentions. On the worse, your startup may end up lower on their priority list. I had a couple of proposals like this and I rejected them outright. Personally, I'd never do this.

Dan Hubbard Founder, www.FocusedAgility.Solutions/

October 2nd, 2018

The description is unclear, but the obvious challenge is competing interests and fiduciary duty. It almost seems like you want a use case to show it has been done. But i'm not sure you'll get that use-case without a better explanation.