What is a Founder?
Individuals Who Start New Businesses
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Table of ContentsWho is a Founder? Stage of Business and Personal Beliefs Early OwnershipDeparting the CompanyAlternative Names of Founders
Who is a Founder?
An individual who establishes a new business is known as a “founder”. If more than one individual is involved, they are co-founders. There are no hard and fast rules about what name or title the founders can take.
Stage of Business and Personal Beliefs
Who is considered a founder will depend entirely upon at what point the individual joins the company and whether that individual considers herself to be a founder.
If two individuals develop and business concept and bring that concept into existence together, then they are obviously co-founders. But, what happens when one of the individuals develops the business concept. She later takes steps to bring the business into existence. Later, another individual joins the company while still at a fledgling stage. Is the second individual a founder?
Applying our concept of timing and personal belief, the individual could certainly be a founder — even though she was not present from the very beginning. But, what happens if the individual joins the company far later in its development? What stage of company development is still considered the founding stages? Some of the earliest stages of the company are: Ideation, entity organization, development of value proposition, minimum viable product, or alpha testing. Anyone joining a company during these stages may well feel confidant that she is a company founder. If an individual joins the company at a slightly later stage (Beta test, intellectual property protection phase, seed funding, positive revenue stage, etc.) may not consider herself to be a startup founder.
Some people may see having an early ownership in the company as constituting status as a founder. This is difficult to support, however; as most early employees of startups receive some sort of equity in exchange for their participation in the business.
In a conversation, one founder may indicate that she is the founder of a company, even though she has other co-founders. This routinely happens when the individual was the original or principal founder. For example, Mark Zuckerberg dons the title of founder of the company, Facebook, Inc. While he was the earliest founder; n reality, he was a co-founder with several other individuals. Those individuals joined the company while it was still very early in the development stage.
Departing the Company
Many of those individuals later departed the company. Nonetheless, these departing individuals are still co-founders of the company. The individuals who remain with the company will continue to use the title founder or co-founder. If all other co-founders leave the company, it is likely that the individual will simply don the title of founder. It is highly unlikely that the individuals who depart the company will continue to claim the title of co-founder of their former company.
Alternative Names of Founders
A founder of a company may don any number of other names that denote their position in the company. This may in include member, principal, director, chief executive, president, or owner. Any of these titles are generally used in addition to that individual’s status as a company founder.
Of course, any of these additional names may have some level of influence or impact on third parties. For example, a third party may feel that a person using the title of CEO in a two-person company is pretentious or falsely grandiose. With this in mind, it is important to consider the effect of employing a business name will have on others.