A Reflection on Societies, Transparency, and the Future of Business

Venture capital firms often conduct extensive due diligence on founders to invest in a startup and find the right team. However, they often don’t exercise the same care when choosing their own business partners.

I believe it is essential to pay close attention to the entry to avoid problems with the exits. Choosing a partner to start a venture capital firm is undoubtedly a critical decision that requires careful consideration and caution.

I have written this article based on my experience and research conducted with my partners, colleagues, and associates. The purpose of this reflection is to understand the perceptions of other professionals in the market and assist in developing a more strategic view of partnership, succession, and how to build a lasting VC firm.

A venture capitalist spends most of their time diligencing innovative business founders and trying to find the right team to support them in their mission to grow and establish themselves in the market. But what about choosing partners to compose our own team and start our own business? To paraphrase the Greek proverb, the physician must heal himself.

Being a venture capitalist has always been part of my plans, but I never thought of doing it alone. Honestly, I couldn’t imagine running an investment management firm without trusted partners to share the experience of being in a position of decision-making and risk-taking.

The truth is, no matter what field you’re in, starting a company is difficult. But the journey becomes a little less arduous if we have partners by our side to face market fluctuations and make tough choices.

That’s why choosing the right partners is the most important step. More than just affinity and willingness, this decision requires a series of careful considerations, such as alignment of values — financial, ethical, and moral — professional goals, and, of course, market experience.

Many VCs fail because they don’t have the appropriate criteria for choosing the right partners. Of course, success is not guaranteed. The main issue here is to establish guidelines for the entrepreneur to chart a path that makes sense for their business.

I hope that sharing my experience, as well as the ideas of people I admire and draw inspiration from, will be beneficial for those who are experiencing different moments in this journey called partnership.

First and foremost, what are the values of the people you want in your company?

Every day, the market seeks institutions with very clear purposes more and more. And that alone would be argument enough to defend that the skills of the partners need to be aligned if they want the success of the business.

However, more than that, these positions are fundamental pieces for the long-term health of the partnership. They are the ones that will support decisions in great opportunities and, especially, in difficult times.

Here at Domo, we are dream achievers, committed to results, and always willing to make new mistakes. We share the vision that we accomplish much more together, and that’s why we leave the microphone open for everyone to share ideas that can add value to the work.

When I asked my colleagues, investors, and entrepreneurs, 52% of the responses I received were related to pillars that I categorized as “behavior and responsibility” because they relate to the qualities and professional profile that the interviewees look for in someone who is part of their company.

Among the identified characteristics are resilience, courage, empathy, determination, and humility. A profile that favors the entrepreneurial attitude, such as innovation, open-mindedness, a similar philosophy to conduct business, and a willingness to make sacrifices.

Next, we have an ethical and moral guideline, where values mentioned by 25% of the interviewees appear. Some of them are transparency, empathy, integrity, honesty, and courage. An important point since they will guarantee the integrity and reputation of the company, as well as establish trusted relationships with the various stakeholders involved.

It doesn’t surprise me that in a world where we talk more and more about Corporate Governance, these topics stand out. I believe that the combination of all these factors is what contributes to strengthening the image and reputation of a company, as well as building trust relationships and sustainable and socially responsible development.

What should we look for when building a partnership?

Choosing a partner for a venture capital firm requires dedication and effort because it means finding someone with relevant experience, leadership skills, a strong network, and, of course, compatible values. I’m referring, above all, to someone who complements your skills and brings independent thinking.

This is because by bringing someone into the game who offers new components to the team, you are filling gaps and making your company stronger and more competitive. It can also improve decision-making, create innovative solutions, and explore new business opportunities.

Additionally, it’s important to ensure there is personal connection and respect among those involved. By sharing the same purposes, there is an increased likelihood of ensuring everyone is working towards the same goal and can support each other during difficult times.

Note that I’m not saying you need to find a perfect person. The fact is that partners should be in sync because, in the long run, that’s what will enable the construction of a solid corporate culture.

However, one point that caught my attention in the responses to my survey is that only 9% of people mentioned diversity as a crucial factor. This concerns me because I believe the future of the VC market depends on building a diversity-oriented mindset today.

On the other hand, I understand that this data may indicate that, although the subject is extremely important, it is not yet seen as a priority for most because we still lack parameters and precedents on how to put diversity into practice.

Regardless, I believe that having partners with an empathetic and humanized leadership mindset broadens the perspective on the needs for social and corporate development and sustainability. The future and the present are human, and they prioritize the well-being and quality of life of people, not just profit maximization or production efficiency.

In the end, choosing someone to build a partnership is always an important process that requires dedication and effort. But with careful analysis, it is possible to find the ideal partner(s) who can add value and help lead the company to success.

Once again, it was no surprise to receive completely diverse responses. After all, there is a need for partners to cover each other’s weaknesses. In fact, one of the responses was precisely “they need to compensate for my weaknesses.”

How to build a solid and fair shareholder agreement?

Now, from a legal perspective, it is essential to pay close attention on entry to avoid problems on exit. This is the only way to ensure stability and equity among partners and, of course, safeguard the health and sustainability of the business.

In this topic, people surprised me with their responses. The majority emphasized the need for the parties to be “on the same page,” with transparency and clarity about the values and activities of the business. However, I felt the lack of more specificity about what would be included in the contract.

So here’s my advice: while choosing a partner is aspirational and ideological, the contractual formalization of the partnership is legal and objective! Think about the smallest details, in case of success, and most importantly, in case of setbacks. You know the story of the “fine print” that scares people? In partnerships, they should all be in bold letters.

By this, I mean clearly defining each party’s shareholding — both in terms of percentage and rights and obligations — establishing clear rules on how decisions will be made, and last but not least, creating exit terms. In this regard, it is possible to include options for share purchase, non-compete clauses, and other rules that both parties consider fair. Hiring a lawyer specializing in corporate law is also important to guide you in creating a balanced shareholder agreement, ensuring that all legal aspects are considered.

I understand that starting a partnership while already thinking about what could go wrong may seem a bit discouraging and, for the superstitious, even a sign of bad omen. The truth is that considering potential conflict situations is a form of prevention.

And of course, unforeseen events can still occur, but this is the ideal mindset to minimize impacts and solve problems more efficiently. Always remember not to compromise what truly matters: your business.

How to act when things don’t go as planned?

Even when we are cautious, situations and circumstances don’t always cooperate for the predictions to happen as planned. In moments of crisis, when the feeling of frustration starts to take over, it is important to look at the situation from both perspectives and not act based on emotions.

The research indicated that 50% of the respondents believe that mediation is the best approach, and some were quite directive: seek a conflict mediator. Another 35% emphasized the importance, once again, of transparency, good communication, and objectivity when facing the facts. Meanwhile, 10% didn’t even consider the possibility of it happening and revealed that they wouldn’t know how to act, with an honest and admirable “no clue.”

That’s why we need to demystify partnerships. It is important for partners to be friends and trust each other. But above all, a partnership is a business agreement: let’s be professional. Therefore, I fully agree that it is important to make the process strictly professional and not personal from the very beginning.

In fact, it is important to have a well-structured governance framework early on in the business. This way, internal policies and guidelines help companies adapt and reinvent themselves in the face of changes and uncertainties, as it ensures that resources — financial or otherwise — are managed properly and responsibly.

When there’s no other way and the partnership needs to be dissolved, clear and open communication is crucial to deal with the breakup. I often say that a bad agreement is better than a good fight, so keep the focus on acting rationally and strategically.

Ultimately, nobody wants a legal dispute! And avoiding this hassle starts early: choose your partners wisely, create a good partnership agreement, establish boundaries from the early days, and in case of breakups, keep the process strictly professional. That is the path to protecting the business from a possible breakup.

If all of this seems elaborate and confusing, I’ll leave you with a summary I received as a response from a colleague: Have an “asshole clause” to plan what will happen if one side puts the other in a bad situation. Hope for the best but prepare for the worst!

Is there a formula for the perfect partnership?

Certainly not! The unpredictable will always be present, but what I have learned is that the path to a good partnership and the creation of a generational company starts with a team of founders aligned in values and diverse in thinking, a defined direction that will result in a strong culture, clear management rules, and the flexibility to adapt as the market and society evolve.