How Should Partnerships Work in Startups?

Partnership is a subject that needs to be thought through in detail, with all its pluses and minuses. On the one hand, a partnership is a joining of forces; on the other, it is a relationship that will work or fail depending on how much each person is willing to sacrifice.

Capital is not just money

Partnership shares should be weighed against capital. But capital is not just money. Capital is knowledge, network, labour, ideas and money. The healthiest approach is to set partnership shares by weighing all of these elements of capital.

Sacrifice and commitment

The most important thing in a partnership is sacrifice. How committed each partner is to the business, and how much time and effort they put in, matters a great deal. Can a partner who puts in money and does nothing else take the same share as a partner who works twelve hours a day but has no money? The answer to this question should be settled at the start and put in writing.

Partnering with family and friends

Going into partnership with family members or close friends is one of the riskiest kinds of partnership. When the business relationship breaks down, the personal relationship suffers too. In these partnerships, roles and responsibilities need to be defined very clearly, and business and private life need to be separated with firm lines.

Disagreements and how to resolve them

Every partnership has disagreements. What matters is deciding at the outset how those disagreements will be resolved. The partnership agreement should clearly set out the exit strategy, the dispute resolution mechanism and the decision-making processes.

The Turkish Commercial Code sets out specific rules on partnerships. Knowing those rules and drafting your agreement in line with them will prevent problems that could arise later.

Golden rules of partnership

• Roles must be clear: who does what, and who is responsible for what, should be set from the beginning.
• There must be an exit strategy: what happens if the partnership breaks down? The answer should be set from the beginning.
• Communication must be continuous: problems start the moment partners stop communicating properly.
• Values must match: partners need to be aligned on how they do business, their ethics and their vision.
• Performance must be measurable: each partner's contribution should be tracked with measurable metrics.

If you want to go fast, go alone; if you want to go far, go together.