Should I bring on a technical cofounder or outsource to build a prototype?
I would like to build a prototype for an idea I have to get feedback and hopefully some seed funding. I am wondering if I should outsource this to a development firm or find someone with technical skills who could come on as a cofounder. I've heard that investors prefer you have a solid team in place, but bringing on a cofounder might be more work with addressing equity and ownership issues. Also, I think a protoype might help me show a potential cofounder the potential.
I would suggest a mix of both. First, you may outsource MVP or a prototype development to a software development firm so that it helps you to pitch to potential investors to get some seed funding. Once you see that the product has some potential then you may decide whether you would like to outsource or would like to hire in-house. As both have their advantages and risks. I would suggest you go through this post which is about outsourcing software development vs. in-house hiring.
In today's industries having a prototype to show is imperative, fast and sometime cost-effective. You have those 2 options already, and what happened to everyone is not the rule. It's up to you to come up with an initial proposal for negotiation when meeting a cofounder, even though no a guarantee since this person will ponder his interest and future commitment to it. Deciding to outsource means you pay for the prototype right away and could be faced with a situation in where you may be asked to prove scalability of your prototype, and if you are not technically prepared that is tough - you are alone. Real cofounders can provide amazing needed support, but that is not free, hey! there is the thing. It's up to you, up to what type of contract you decide to get into, and that simple decision would incredibly affect when you are presenting to investors or potentials because it shows part of your preparation; it shows you are doing your homework. A team is imperative for growth but if you cannot prove it in a small scale,you hardly could later on.
Success to you!
If you have enough technical knowledge to brief and manage a developer and the funds to pay for it then outsource, but keep the prototype as simple as possible in line with lean start up.
Never be in a rush to find a co-founder. If you can demonstrate customer demand from your prototype, you will be in a much better position to attract a better level of talent. Good technical people are very much in demand, but they rely on commercial savvy to "pay the bills". Much better to go shopping for a CTO from a position of strength.
Technical co-founders are a bit tough to find while outsourcing projects may not guarantee the quality of product.
In my opinion, For a Prototype, it would be best to outsource it. Why?
1. Save Money.
2. Quickly build your product.
3. Every idea has a shelf life. Having and idea for too long may loose momentum and never get executed. My mantra is simple:
Plan - Research - Execute - Launch - Customer Review - Evolve
4. Once your prototype is ready, It will allow you to expand further, get funded and then you will be able to hire good team members and find co-founders aswell.
There are surely some bad apples out there in the outsourcing industry, From my experience at MobiNxt, We have helped many clients with prototype and they have achieved funding aswell.
Would love to help you out :) Let me know if this helps.
In my experience, you should outsource this to a development firm completely and get your idea be implemented in the prototype. Going for a technical co-founder would not only put you at addressing equity and ownership issues but also, you would be answerable for your every move and would not have that kind of independency.
Jen, Instead of turning your project over to others, I would recommend you spend time sourcing the right person or team to work with you. It need not be a "cofounder". Rather a project based, deliverable defined consulting contract. This can give you the support and expertise you need, when you need it, and when prototype is complete, contract done.
In my experience the decision to hire technical expertise versus outsourcing a project is dependent upon your long term goal. Do you want to be a manufacturer, or are you looking to sell the product. Or put another way do you want to be asset or non asset based. If asset based is your choice, hire or partner wih your expert, otherwise outsource.
Before you consider any of your ideas, you have to ensure that your legal work is in place.
Here are the basics:
1. Get yourself an non disclosure agreement - something you will need more than once - http://goo.gl/QQ4kN2 ~(it is free) - anybody you work with (or consider) should sign - you can use free electronic e-sign firms (if in doubt, send me an email and I point you in the right direction) Start with that.
2. Depending on the prototype, I suggest you find somebody in the UK or in the US. However tempting prices might be from Asia - your prototype will be in mass production before you had your sample back.
3. Co-founding sounds like 'no money'.
Overall, it sounds a bit that you have an idea and no money. Normally, there is no such person as a co-founder (think about it -- he/she would be standing next to you!) you founded, nobody else. What you really mean is an investor or business/investing angel . So it will be back to basics:
Start a company? Go on your name? Raise funds - on what basis?
Feel free to send me a private message to help you further - however - you should start with an NDA, making sure all your legal work is in place. It could bite you in the future if not dealt with at the beginning of your venture.
In my experience, unless you have a real good technical grasp of what it's going to take to even get to a prototype stage, you'll be better off having a technical co-founder involved. Even if you end up outsourcing a lot of the actual development and build activities, you're going to want someone involved "as a stakeholder" that can guide the design and build of the prototype. This could take the form of an actual co-founder, or you could find someone willing to take an "advisor" relationship to help you get the prototype built which could then lead to a more formal arrangement once something is put together. Regardless of the timing, you're going to need to face the equity and ownership issues at some point if this prototype is something that people are willing to fund.
As @Ray Badger clearly indicates, it will depend on a number of factors, including; how far along has your idea come and what are you willing to give up to realise this idea.
Here's what I'd suggest based on personal and shared experiences. Whilst there are pros and cons with each option, I hope you are able to make the right call. One that works for your personal circumstances and helps you "REALISE YOUR IDEA".
1. Outsourcing - Tech Firm
Outsourcing to a firm means the contracted company will need to have all the information about your business idea, the technical functions, features and all the processes as well as the complicated negotiations regarding non-disclosures, patents etc. Having said that, a good one who will cover all bases and guarantee everything will be down to costs. Some might even take an equity in the business so worth investigating.
2. Hiring - Tech Expert
Hiring a tech expert to work alongside you can be very costly and whilst investors do prefer you have a solid team in place, they would be better assured if you had a team, not "hired experts". This also helps address some potential actualisation risks. Bringing on a cofounder may mean you having to give up some equity but then, investors will feel more assured especially, if it's a tech based business. And you're right, a prototype will help you show potential investors the potential of your business and demonstrate how it works with the tech person having the answers to all questions regarding the architectural framework and process functions.
3. Partnerships - Co-Founder
Bringing a co-founder on board with the technical expertise has many benefits and advantages. With this option, you at least have the opportunity to find someone who hopefully, will be part of your organisation for the long term. As a tech co-founder, they will be able to source and attract the right talent you need to scale and grow your business. They will also have a vested interest and therefore are more likely to want the business to succeed. With this option, you are able to tie them in with any agreements including non-disclosures and patents.
In any case, do as much as you can and only bring in someone to do what you cannot do yourself. The goal here is to "REALISE THE IDEA".
Hope this helps. Feel free to connect if I can be of help.
Best of luck