Looking for a joint venture partner: what to pay attention to

Looking for a joint venture partner: what to pay attention to

Alexey Oleynikov, managing partner of InVenture Investment Group, describes briefly how to find and choose a business partner and how to build relationships up correctly in a joint business

Recently, more and more often you can notice advertisements with multi-day and expensive trainings on how to build a partner business, where theoretical speakers without experience in commercial entrepreneurship are contemplate about the principles and risks of joint business.

As a part of the investment activities of InVenture Investment Group, we often encounter the tasks of attracting investment in various businesses and creating companies with several founders. There were, of course, successful cases, but there are also failed examples.

Those who did not have experience in doing joint business before, neglect the issues of compatibility of business partners, the distribution of roles in the project, the responsibility of the parties and eagerly rush at the first investors who are ready to give money.

So, for example, the cause of collapse of one flower business was the hurry of partners in incorporating a joint business: the ranges of responsibility of the participants were not distributed initially, the obligations and responsibilities of the parties, the exit conditions of partners were not paved legal way. Moreover, after the first week it turned out that the partners had complete psychological incompatibility. As a result, it came to police appeals and litigation.

Those who have previously encountered a partnership, as a rule, try to provide the maximum level of control over operational work, using a pool of tools, such as, for example:

  • development of a detailed business plan with a project office;
  • attracting valuable lawyers to develop charters and shareholder agreements;
  • registration of business in Western jurisdictions;
  • appointment of a trusted chief accountant or financial director;
  • formation of the Board of Executive Directors;
  • management accounting, IFRS and regular auditing of the company;
  • video monitoring of production, storage and retail premises;
  • and much more, up to electric collar for the CEO.

All this is important, of course, but it will not save you from collapse in the case of modeling business with an unscrupulous partner who has different views on doing business.

We recommend that you begin to implement all of the tools mentioned above (it is likely that not all of them will be needed), after you accept the following three investment rules:

  1. Join companies where the co-founders have a similar worldview, are able to follow the rules of the game, listen to and negotiate.
  2. Trust the partner and be obvious and predictable for him.
  3. Permanently bring value and benefits for the development of a common cause.

Have successful partnerships and joint business!

If you need our support in finding a reliable investor/partner in your business project, please contact!

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