Building your founding team

Building your founding team

Author: The Carta Team
|
Read time:  4 minutes
Published date:  February 23, 2024
In this article, we’ll cover the various startup positions, when to bring on which type of founding team member, and general guidelines to help you build your founding team.

It takes a lot of different people to build a successful startup. Depending on the stage of your company, your financial resources, and your overall goals, as a founder you may want to prioritize certain leadership roles or founding team members over others.

Founder vs. co-founder

First, a word about the two main types of founding setups at early-stage companies—solo founders, and founding teams. Entrepreneurship is rewarding, but being a solo founder can also be lonely and stressful. Having a co-founder can help mitigate that stress and infuse your startup with crucial complementary skills to your own skill set. For example, a SaaS or tech startup founder who has strong technical coding skills might want a co-founder with a background in finance or operations.

→ Learn more and download a free equity split calculator in our guide to co-founder equity

Founder vs. CEO

A startup’s founder will often take on the CEO role too, but not always. Founders tend to take on the role of visionaries for the business idea and company they started. Generally, the CEO role is best for someone who will be the face of the company, for example leading sales conversations and investor pitches to VCs. Another key difference: While the founder of a company never changes, CEOs can come and go and may be subject to the whims of the board.

C-suite

“C-suite” is an umbrella term for high-level or senior executives with a “chief” in their title. Filling out the rest of your C-suite—beyond the CEO role—may or may not be necessary. Your hiring needs will depend on your company’s fundraising stage and overall business needs.

Chief Financial Officer (CFO)

A chief financial officer oversees finance, accounting, treasury, risk, and investor relations. You can hire a CFO to help prepare for a new fundraising round, manage cash burn more effectively, or after hitting a certain ARR threshold (for example, when you start making over $50 million in annual recurring revenue).

Chief Technology Officer (CTO)

The chief technology officer role is, unsurprisingly, best for someone with a technical background. A CTO can help develop your product and tech, ensure product-market fit, and identify opportunities for innovation and improvement.

Chief Operating Officer (COO)

The COO role involves the management and oversight of day-to-day operations and can span a variety of departments, such as human resources, finance, and general operations. The COO is instrumental in developing and implementing efficient business processes and policies to enhance operational efficiency. Working in tandem with the CEO, the COO plays a critical role in translating strategic goals into actionable operational plans.

Startup lawyer

A law firm is one of the first major outside partnerships you will establish as a founder. And it’s not one you can source via an online list, Yelp, or even your friends. While it’s good to ask your network (especially any lawyers or founders you may know), it’s important to find an experienced team or individual that’s comfortable working with startups in all their ambiguity and growing pains, as well as the industry your company is entering. 

→ If you’re getting ready to raise financing and need a referral to a law firm, contact us at partnersales@carta.com and we’ll do our best to help.

Startup advisor

In the startup world, an advisor is a seasoned, professional mentor who offers insights and networking opportunities to startup founders and teams. They often have extensive experience in the industry and specialized knowledge in areas such as business strategy, technology consulting, marketing strategy, or finance. 

The role of a startup advisor is to provide business advice, serve as a sounding board for your ideas, and give recommendations to improve your startup. They can also introduce you to their network, which is helpful if you’re looking for new talent or need guidance when raising capital.

Human resources

Getting compensation and benefits right is essential to building company culture and finding talent. Whether you have an official head of HR or someone else wearing many hats while your company gets started, the HR role is essential to setting the stage for growth. 

While you’re building your founding team, don’t forget to build them a compensation plan too. A compensation plan or “comp plan” is a set of guidelines for your employees’ salaries, bonuses, and equity.

→ Learn more about creating a compensation plan from scratch.

Board of Directors (BoD)

After you incorporate your business, there are certain legal requirements to uphold. For all corporations, the state of incorporation dictates board of directors (BoD) requirements. Although private LLCs do not have the same requirements, some choose to create a BoD after incorporating.

→ Learn more about board management.

Investors

Startup funding can come from many sources—including angels, accelerators, crowdfunding investors, venture capitalists, corporate and institutional investors. Different types of investors invest at different stages of company development, and have different risk profiles and expectations about their involvement in the company. 

As an early-stage startup founder, the partners you bring into your business—and the tenor of the relationships you build with them—are often more important than the “name recognition” of the venture capital firms they work for. Sometimes joining an accelerator or incubator can provide valuable mentorship from experienced entrepreneurs and industry experts, as well as access to potential investors and a supportive community.

Employees

Early employees are the last (but hardly the least) important members of your startup’s founding team. Building a good team, similar to building a successful company, can take years. But investing in talent from the beginning can pay off for your startup in the big picture. Even if your company is not turning a profit in the early days, you can compensate hard-working contributors with non-cash incentives like equity and stock options that vest over time.

Owning equity in a company can align equity holders with the overall prosperity of your growing business. The ability to own equity can be an incentive to join a company, stay at the company for longer, and feel more invested in the company’s success.


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The Carta Team
While we believe in assigning ownership at Carta, this blog post belongs to all of us.
DISCLOSURE: This communication is on behalf of eShares Inc., d/b/a Carta Inc. ("Carta").  This communication is for informational purposes only, and contains general information only.  Carta is not, by means of this communication, rendering accounting, business, financial, investment, legal, tax, or other professional advice or services.  This publication is not a substitute for such professional advice or services nor should it be used as a basis for any decision or action that may affect your business or interests. Before making any decision or taking any action that may affect your business or interests, you should consult a qualified professional advisor. This communication is not intended as a recommendation, offer or solicitation for the purchase or sale of any security. Carta does not assume any liability for reliance on the information provided herein. ©2024 eShares Inc., d/b/a Carta Inc. ("Carta"). All rights reserved. Reproduction prohibited.