3.18Co-founders and the founding team

Running reference checks on a potential co-founder

Stage: Pre-seedCore

1. Core idea and who it's for#

You will probably spend more time with a co-founder than with almost anyone else for the next 5 to 10 years. You will share control of a company, equity worth possibly millions, and the reputations of everyone who joins. Yet many founders check a first engineering hire more carefully than a co-founder.

Reference checks on a potential co-founder aim to answer four things that working sessions and interviews can't fully show:

  1. Track record. Did they actually do what they say they did?
  2. Behaviour under pressure. How do they act when things go wrong, when they disagree, or when money is tight?
  3. How they treat people. Especially people with less power: juniors, students, suppliers.
  4. Hidden obligations. IP owed to a former employer or university, non-competes, disputes, or legal problems.

The method has three parts: references they give you, "backchannel" references you find yourself, and basic checks on public records and legal commitments. Investors will run the same checks on both of you before they invest (see 3.03 on the trial period, which comes first).

Who it's for: founders choosing a co-founder, late co-founder (3.09) or founding executive, and anyone being asked to join as a co-founder, who should run the same checks the other way.

The one-line rule: do it openly, ask for specific stories, and look for patterns across several people, not a single verdict.

2. Evidence#

Investors treat reference checks as essential. Signature Block's guide, compiled with input from venture funds, found that every investor stressed the importance of referencing founders. One said they never invest without thorough reference checks on every founder. If investors do this before writing a cheque, a co-founder about to share a company with you should do at least as much.

Backchannel references carry the most signal. VC Beast notes that provided references will obviously say positive things. Good investors call people who weren't on the list: former colleagues, people who reported to the founder, previous investors, customers and past co-founders. A guide summarising a16z's approach describes listed references as polished and the backchannel as ground truth.

Structure beats chat. Research on hiring has long found that unstructured reference checks predict performance only weakly, while structured questions about specific behaviour do better. First Round Review publishes a widely used set of 25 questions for reference calls. Bain Capital Ventures advises going in with structured questions, and fewer but more relevant references.

Calibrated rankings help. GoingVC suggests asking references to rank the founder in the top 1%, 5%, 10% or 25% of people they've worked with in a similar role. Elad Gil notes that a reference's tone can shift from "great" to "hard to depend on" as a call goes on, so keep asking.

Context matters. Bain Capital Ventures warns against taking any one data point as the truth: a best friend's glowing review and a fired employee's attack both need context. Terrence Rohan points out that around half of startups have a founder breakup, so a former co-founder's criticism is not automatically disqualifying.

Working together tells you most. Where you've worked closely with someone for months, that experience outweighs anything a reference can say. References are best used to test what you've seen in a trial (3.03) and to find things a trial can't show, such as past conflicts and legal obligations.

3. Method#

Step 1: Agree to check each other#

Tell the candidate you'll run references, and offer the same to them. Mutual checks remove any sense of suspicion. Ask for 3 to 4 named references:

  • a former manager;
  • a peer;
  • someone who reported to them;
  • for academics, a PI or co-author;
  • if they have founded before, a former co-founder or investor.

Tell them you'll also speak to a few people they didn't list.

Step 2: Build the backchannel list#

Find 3 to 5 people who worked closely with them but weren't named. Look at overlapping employers, labs, co-authors, past company cap tables or teams, and your investors' networks. Ask the candidate whether there's anyone you shouldn't call, such as a current employer who doesn't know. Respect confidentiality.

Step 3: Use a structured call (20 to 30 minutes)#

  1. Context: "How did you work together, for how long, and in what roles?"
  2. Specific stories: "Tell me about a time they had to deliver something hard under pressure. What happened?"
  3. Conflict: "Describe a disagreement you had with them. How did it get resolved?"
  4. People: "How did they treat junior people, students or suppliers?"
  5. Weaknesses: "If you were their manager again, what would you coach them on?"
  6. Calibration: "Compared with everyone you've worked with in a similar role, are they top 1%, 5%, 10% or 25%?"
  7. Hidden obligations: "Are you aware of any IP, non-compete or other commitments that could affect a new company?"
  8. Closing: "Would you start a company with them? Is there anything I should have asked?"

Take notes, and listen for hesitation, faint praise and repeated themes.

Step 4: Check the facts#

  • Track record: confirm degrees, roles, publications, patents and claims about past companies, using LinkedIn, Google Scholar, patent databases and company filings. Legal and IP: ask to see any non-compete, confidentiality or IP assignment agreements with current and former employers, and any university IP policy that applies. Check whether the core technology overlaps with their previous employer's work (1.15, 2.01).
  • Public records: check company registries for past directorships and dissolved companies, and run court-record or litigation searches where appropriate and lawful (section 4).
  • Formal background checks: consider one through a licensed provider, with the candidate's written consent.

Step 5: Decide and discuss#

Write one page on the patterns you heard: strengths, concerns and open questions. Discuss concerns openly with the candidate, since how they respond is itself a reference. Decide whether to proceed, proceed with safeguards (such as a longer cliff or a clearer role), or stop.

Worked example (illustrative)#

An Indian founder building a battery-recycling company is considering a co-founder CTO, a metallurgist with 8 years at a large manufacturer and a PhD.

  • Named references (3): all positive and specific about technical depth.
  • Backchannel (4): two former reports describe him as brilliant but slow to delegate. One peer mentions a dispute with a previous employer over a process patent.
  • Fact check: his employment contract includes a 12-month non-compete for "competing businesses" and broad IP assignment. A patent search shows one of his old employer's filings is close to the planned process.
  • Discussion: the candidate is open about both points. A lawyer reviews the contract and the patent. They change the technical approach to avoid the patent claims, and get a clear written release from the former employer.
  • Safeguards: they agree on a VP Engineering hire by month 18 to address delegation, and standard vesting with a 1-year cliff.
  • Outcome: the seed investor's own diligence later finds the same points, already resolved and documented, which speeds up the round.

4. India, US and UK differences#

India#

  • Data protection: reference and background checks involve personal data under the Digital Personal Data Protection Act 2023. Its core obligations, such as notice, consent and purpose limits, apply in phases, with most from May 2027. Get written consent before formal background checks, and keep notes secure and limited to the purpose.
  • Non-competes: post-employment non-competes are generally unenforceable under section 27 of the Indian Contract Act. Confidentiality and IP assignment terms, however, are enforced. So the bigger risk from a candidate's past employer is usually IP and trade secrets, not the non-compete.
  • Public records: check the MCA portal for directorships and disqualified directors, and use court-record search services for litigation. Education and employment checks through licensed agencies are common.
  • Academics: check the institute's IP policy and any obligations under governmentfunded projects (1.03, 2.01).

US#

  • Background checks: if you use a consumer reporting agency for an employment decision, the Fair Credit Reporting Act requires a standalone disclosure and written authorisation, plus specific steps before acting on adverse findings. A co-founder who will be an employee is likely covered. States add their own rules, for example California's, and some limit criminal-history questions.
  • Non-competes: enforceability depends on the state. California voids most noncompetes, while others enforce reasonable ones. The FTC's 2024 nationwide ban was set aside by a court and is not in force. Invention assignment and confidentiality agreements are widely enforced.
  • Public records: check state company registries, federal and state court records (PACER for federal cases), and USPTO patent records.

UK#

  • Data protection: UK GDPR applies. You need a lawful basis, usually legitimate interests or consent, and should tell the candidate what checks you'll do. Criminal record information is special and needs a specific condition. A basic DBS check, applied for by the individual or with their consent, is the usual route.
  • Non-competes: enforceable if reasonable in scope and length, often 6 to 12 months for senior people. The government has consulted on limiting them, so check the current position. IP assignment and confidentiality are enforced.
  • Public records: Companies House for directorships and disqualifications, the Insolvency Service register, and court records where available.
  • Academics: check the university's IP policy and any spinout terms (2.03, 2.11).

Scripts#

Proposing mutual checks:

  • "Before we commit, I'd like us both to do proper references, the same way an investor would. I'll give you four names and you can call anyone else you like. Can you do the same?"

Opening a backchannel call:

"Thanks for making time. I'm thinking about starting a company with Arjun, and I know you worked closely together. Anything you say stays with me. I'm trying to understand how he works, not to catch him out."

Getting past polite answers:

"That's helpful. If you had to pick one thing that would make working with him harder over five years, what would it be?"

Raising a concern with the candidate:

"A couple of people mentioned you find it hard to hand off work. That matters to me, because we'll need to scale the team quickly. How do you see it, and what would help?"

Common mistakes#

  1. Only calling the names they gave you. Listed references are chosen to be positive.
  2. Asking yes-or-no questions. "Is she good?" tells you nothing. Ask for stories.
  3. Treating one negative reference as decisive. Look for patterns, and weigh each reference's context.
  4. Skipping the IP and legal check. A co-founder's old employment contract or university obligations can taint your core IP.
  5. Checking secretly. If the candidate finds out, you damage trust before you've started.
  6. Calling their current employer without permission. This can cost them their job.
  7. Not being checked yourself. Offer your own references. A good co-founder will want them.
  8. Ignoring data protection. Formal background checks need consent and secure handling.
  • 1.15 Employer IP clauses and turning a side project into a company
  • 2.01 Who owns your invention?
  • 3.02 Where to find co-founders
  • 3.03 Co-founder dating: trials and questions
  • 3.09 Adding a co-founder late or after a round
  • 3.14 Couples, friends and family as co-founders

3.17 Replacing yourself as CEO

Sources#

This playbook is general information, not legal advice. Background checks and data protection rules differ by country and state, so check what applies before running formal checks. Last checked November 2026.

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