When we hear the phrase “due diligence,” it sounds like something only lawyers or investors do, very formal and maybe a bit scary. But due diligence simply means doing your homework. In the context of choosing a CoFounder, it’s all about making sure you really know the person before you tie your fortunes together. Imagine you’re picking a teammate for a high-stakes relay race; you’d want to know if they can run fast and won’t drop the baton, right? The same goes for a startup CoFounder. This newsletter will give you a friendly, step-by-step guide to checking someone’s background, reputation, and working style. Think of it as “trust, but verify” – you might really like someone’s vibe and ideas, but you should still peek under the hood to avoid nasty surprises down the road.

What is “Due Diligence” and Why Does it Matter?

In plain terms, due diligence means researching and vetting a potential partner thoroughly before committing. If you’ve ever looked up reviewsfor a product or restaurant, or asked around about a new classmate before becoming friends, you’ve done a form of due diligence! For a cofounder, it’s more important because so much is at stake. You’ll be spending long hours together, making stressful decisions, and depending on each other when things get tough. In fact, as we mentioned in the previous newsletter, founder breakups are one of the top reasons startups fail. So, doing a bit of detective work now can save you from heartache (and bankruptcy) later.

It’s not about being distrustful or paranoid – but being smart and informed. You can still trust someone and give them the benefit of the doubt, but trust is stronger when it’s built on knowledge. When you do due diligence on a potential cofounder, you’re looking to confirm a few things:

• Are they who they say they are (in skills and experience)? People might embellish their resumes or take credit for team achievements. You want to know if their stated experience truly matches reality.

• Do they have any past behaviors or issues that could spell trouble?This could be a history of partnerships that ended badly, legal troubles, or a reputation for being difficult to work with.

• Do our values and work habits align? A founder partnership is almost like a marriage. If one of you is a big risk-taker and the other is super cautious, or one values work-life balance and the other expects 24/7 grind, conflicts could loom. It’s better to find that out before you’re in the thick of it.

• How do they handle stress and failure? Startups are full of ups and downs. If your potential cofounder falls apart or lashes out under pressure, that’s important to know early.

In short, due diligence is about making an informed decision. It’s like doing a background check and a compatibility test rolled into one. You’re investing your time, energy, and maybe money into a venture with this person – so treat it at least as seriously as you would a major purchase or a new job hire. Many experienced entrepreneurs will tell you that choosing a cofounder is harder than choosing a spouse in some ways! With stakes that high, a careful vetting process is not overkill; it’s essential.

Steps to Vet a Potential Cofounder

Let’s break down due diligence into friendly steps. You don’t have to play private investigator or interrogator – these can be done in a respectful, even enjoyable way. Here’s a roadmap:

1. Background Check (CV and Online Presence): Start with the basics they’ve told you – their experience, education, past projects. Do a little digging to verify their story cafetosoftware.com. This might include:

• Looking at their LinkedIn profile to see if their job history matches what they told you. Do the dates and roles line up? Endorsements or recommendations there can also give insight into how others view them.

• Googling their name (and maybe their previous startups or workplaces). This isn’t snooping; it’s prudent. Public search can reveal articles, blog posts, or other mentions. Perhaps they wrote an article or have a portfolio site – great, you can learn more about their thinking. Or you might find old news like a startup they founded that failed – that’s not a dealbreaker (experience is experience, and failures teach a lot), but you’ll want to ask them what happened.

• Checking for consistency. If they claim they led a team of 10 at a company, does their online bio or old press match that? Small inconsistencies aren’t always lies (memory slips happen), but big red flags would be if you discover, say, they never actually graduated from that program they said, or their “startup” was just a class project.

2. Reference Checks (Talk to People Who’ve Worked with Them): This is one of the most revealing steps. Essentially, you want to hear from others who have experienced what it’s like to work with this person cafetosoftware.com. How to go about it:

• Ask the potential cofounder directly for references. A good candidate shouldn’t mind you chatting with a couple of their former colleagues, bosses, or employees. You can frame it positively: “Hey, would you be okay if I spoke to someone from the old team you mentioned? It’d help me get a full picture and also maybe tips on how best to work with you.” If they hesitate or get defensive about this, thatitself is a small red flag. Most honest people will understand the need – remember, they might want to check you out too.

• Reach out to the references and ask candid questions. You can do this over a casual coffee or call. Some questions: How was [Name] as a collaborator? Can you share an example of how they handled a conflict or a crisis? Would you work with [Name] again if you had the chance?Listen not just to the words but the tone. A long pause or a very diplomatic answer like “Well, he’s very confident and strong-willed” might hint at issues (perhaps stubbornness). On the other hand, glowing praise like “She was the backbone of our team, great attitude” is obviously a green light.

• Optionally, do informal backchannel checks. This means if you happen to mutually know someone who worked with them (not an official reference they gave, but say your friend happened to be in their previous company), you might ask that friend for their honest take. Be ethical with this – don’t spread gossip, just quietly gather impressions. Sometimes the unprepared answers are the most truthful. Example: “I heard you worked with my potential cofounder Alice at X Co. I’m considering teaming up with her. Anything you think I should know about working with her?” You might be surprised what you learn.

Importantly, don’t take one person’s opinion as gospel. Listen to a few people if possible and look for patterns. If two or three folks independently say “Yeah, he’s brilliant but can be a bit flaky on deadlines,” then pay attention to that theme.

3. “Founder Dating” – Work on a Trial Project Together: You really get to know someone by working with them. A wonderful way to do due diligence (and build mutual trust) is to test out the working relationship before you fully commitfi.co. This could be:

• A short project or prototype: For example, agree to spend a few weekends building a small prototype or doing a mini research project together related to your idea. Treat it like a trial run of running a startup: set goals, divide tasks, and see how you collaborate. You’ll learn a ton about each other. Do they follow through on what they promise? How do you solve problems together? Is it fun or frustrating?

• A hackathon or sprint: Join a hackathon as a team, or have a two-day sprint to crank out a demo. Under time pressure, people’s true working style often shows. It’s like going on an adventure and seeing how each handles the wild.

• Even planning sessions: If the project itself can’t be easily broken off, try a series of planning meetings. Pretend you’re already cofounders and, say, outline the business plan or features list together over a week or two. See if your vision aligns or if you’re clashing constantly.

This “date before you marry” approach is highly recommended by experienced entrepreneursfocusedchaos.co. It can surface issues that talking alone might not reveal. For instance, you might find that your potential cofounder is very bossy when coding together, and you don’t like that. Better to know now. Or you might confirm that you two work like a dream team – awesome, confidence boosted!

While doing this, remember to set some ground rules (maybe you even sign a simple NDA or agreement about any code you write together, just in case). But since it’s a time-bound trial, the commitment is low and you both have an easy exit if it doesn’t feel right.

4. Deep Conversations About Goals and Values: Alongside checking backgrounds and doing test projects, make sure to have some heartfelt talks. This isn’t formal checking, but it’s part of due diligence to ensure you’re aligned on the big picture. Grab coffee or dinner and dive into topics like:

• Why do you want to do this startup? Share your motivations and listen to theirs. Are they in it for passion, for money, for the challenge? If one person’s goal is to create a quick product and sell in a year, and the other wants to build a company for the long haul, that’s important to reconcile.

• Work habits and commitment: How many hours are each of you expecting to put in? Is either planning to keep a day job or have other obligations? If one founder can only do nights and weekends while the other is full-time, that can breed resentment unless agreed upon. Align expectations on commitment level.

• Risk tolerance and ethics: Discuss hypothetical scenarios: What if we’re running out of money – would you want to take a risky loan or rather slow down? How do you feel about making bold promises to investors or customers?Also talk about values: Is work-life balance important or are we both okay with crunch mode? You want to discover if there are any fundamental value clashes. It’s much easier to resolve those now (or decide not to partner) than mid-crisis.

• Roles and vision: Talk about how you envision splitting roles and where you see the company heading in a few years. If you strongly disagree on strategy or who should be CEO, better to hash that out early.

Don’t be afraid to ask hard questions. A great cofounder will engage and be honest, not dismiss or avoid these topics. In fact, if someone is unwilling to discuss these kinds of questions, that’s a red flag in itself. As one tech founder put it, “Negotiate the divorce before the marriage”daniel.es – meaning you should discuss even the tough “what if we fail or part ways” scenario upfront.

Throughout these steps, keep things ethical and respectful. Be open with your potential cofounder about the fact that you’re doing due diligence – it shouldn’t be sneaky. You can even do some of it together: swap references (you check me out, I check you out) so it’s mutual. This builds trust rather than suspicion. Also, respect privacy: don’t pry into purely personal matters that aren’t relevant to working together (everyone’s entitled to a private life). Focus on professional behavior, character, and values that affect the startup.

Common Red Flags to Watch Out For

While doing your due diligence, keep an eye out for warning signs. No one is perfect, so one or two minor flaws shouldn’t automatically disqualify someone – but certain patterns or big red flags should give you pause. Here are some common ones to be mindful of:

• 🚩 Consistently Negative Feedback from Others: If you talk to multiple former colleagues and a theme emerges like “They didn’t pull their weight” or “She had trouble listening to others,” take that seriously. One person having an issue could be a fluke, but repeated stories of problematic behavior mean it’s likely true. For example, if two people independently say your candidate tended to ghost under pressure or miss deadlines, imagine how that would hurt your startup.

• 🚩 Exaggerations or Dishonesty: During your research, did you catch them in a lie or a significant exaggeration about their experience? Integrity matters. If someone lies about small things (like “I built that whole product myself” when they didn’t), they might lie about big things later. Honesty is key in a cofounder relationship – you need to trust each other completely. A pattern of fibs is a big red flag.

• 🚩 Avoiding Important Discussions: If your potential cofounder dodges or keeps postponing conversations about equity, roles, or legal agreements, that’s not a good sign. Someone who says “Nah, we don’t need to worry about that legal stuff, it’ll all be fine” when you bring up a founder agreement or vesting is showing potential unwillingness to be transparent and commit. Similarly, if they get very defensive or angry when you ask routine due diligence questions, consider what that might imply for future cooperation.

• 🚩 Mismatch in Commitment or Vision: Say you discover through talks or references that this person isn’t as committed as you thought (“Oh, he’s actually planning to move abroad next year” or “She said she’s only giving this six months to show traction”). If it doesn’t align with your plan, that’s a serious issue. Also, if their vision for the startup wildly diverges from yours and neither is budging, you may be setting up for conflict.

• 🚩 Past Co-Founder Drama: If they’ve been in a startup before, ask how it ended. Listen for clues like “my cofounder and I had a huge fight”or “they forced me out”. There are always two sides to a story, but try to sense if they habitually blame others or if there’s a trail of broken partnerships. A history of multiple messy breakups with cofounders could indicate poor teamwork or interpersonal skills.

• 🚩 Unwillingness to Implement Vesting or Legal Basics: This is a very specific one: if you bring up having a vesting schedule or signing a founders’ agreement and they respond with something like “Don’t you trust me? I’m not signing that” – big red flag. Any reasonable founder will understand these are standard precautions (as you now know from Newsletter 1!). Refusing them might signal plans to quit early with stockor just lack of understanding. Either way, not good.

• 🚩 Ethical Differences: Pay attention if anything comes up that questions their ethics – perhaps a reference hints that they dealt dishonestly with a client, or during your chats they suggest doing something you find sketchy (like inflating user numbers to impress an investor). If your moral compasses don’t align, think twice. You don’t want to be dragged into a situation you’re uncomfortable with, or constantly arguing over what’s “right.”

Now, a red flag doesn’t mean immediate deal-breaker, but it does mean have a frank discussion about it. For instance, if the person has a reputation for being stubborn, you might say, “I heard from X that sometimes you didn’t take team input. How do you feel about that, and have you worked on it?” Gauge their reaction. If they are self-aware and willing to improve (“Yeah, I know I can be headstrong. I’ve been trying to listen more actively.”), that’s a positive sign. If they deny and badmouth the person who gave feedback (“X never liked me, they’re wrong”), that’s not encouraging.

One final gut-check: Listen to your instincts. If despite great credentials everything feels off – maybe you notice they interrupt you a lot or your values just don’t click – don’t ignore that. As one founder wisely said, “Having doubts about a co-founder is a killer…those doubts don't disappear by themselves. You have to face them head-on.”focusedchaos.co. Translation: if something is nagging at you now, talk about it with them. If it can’t be resolved, it might mean they’re not the right cofounder for you. It’s okay to walk away at the dating stage; it’s much harder later.

Doing It Ethically and Effectively

Before we wrap up, a note on ethics: due diligence should not turn into gossip or snooping into irrelevant personal details. Keep your inquiries professional and respectful. Be transparent with your potential cofounder – you can say you’d like to “exchange references” or that you’ll be doing some background verifications. This openness can actually increase mutual trust, because they see you’re serious about the partnership. Also, be prepared to have them do due diligence on you. Offer up a past colleague or boss who can speak to your strengths and weaknesses. A great partnership is built on mutual transparency.

When asking others about your cofounder candidate, frame your questions in a way that’s fair. Instead of “Did they mess up or are they bad?”, ask things like “What were their strengths and what kind of environment do you think they thrive in? Did you notice any areas where I should provide support if we work together?” This encourages more honest and balanced feedback.

Finally, keep private things private. If you find out something sensitive (say, they had a health issue or a personal matter that affected their work at one point), treat that information with care. It’s about understanding your future partner, not collecting gossip material.

By following these steps – background checks, reference talks, trial projects, deep conversations – you’re setting the stage for a strong, informed cofounder decision. Many founders skip this, only to regret it months later when a surprise pops up. But you’re different: you’re approaching this with eyes open. And if everything checks out, you’ll feel extra confident moving forward together, having built a foundation of trust and understanding.

In the end, due diligence is about building trust the right way. When you know someone’s history, have seen them in action, and have aligned your goals, you can trust them fully as a partner. And that frees you to focus on conquering the market rather than worrying about who you’re riding with. Happy cofounder hunting, and may you find (or confirm you have) your ideal partner in crime – the kind who’s just as all-in on the dream as you are, and worthy of your trust because you’ve done your homework daniel.es!