10 cofounder clashes I’ve witnessed first-hand

by | Apr 2024 | Start a Company

I understand the urge to start your business with a cofounder, but after 7 ventures and 50+ investments, here are 10 co-founder situations I’ve witnessed first-hand:

  1. One company with huge potential closed down immediately after raising a round of investment(and gave the money back to investors) because the founders couldn’t agree to work together. Nobody had a good exit.
  2. Two cofounders absolutely hated each others’ guts. The company actually performed well, but it wasn’t fun and by the end they couldn’t stand to be in the same room. (This is far from uncommon.)
  3. Two best friends started a company together. Now they never speak. (Similar to #2 but worse because they had been friends since childhood.)
  4. One founder walked away with a fraction of what “should have been hers”. I’ve seen this half-a-dozen times, often due to one founder having better access to lawyers.
  5. One founder worked twice as hard as the other(s), but equity was already locked, causing feelings of unfairness and resentment.
  6. Two founders asked a third founder to leave – effectively firing them from “their own startup”.
  7. Two founders both owned 50% of a company that went to ruin because they had no mechanism for moving forward in the event of deadlock.
  8. A founder resigned after being put in an ethically compromising position by her cofounder, which effectively killed the company.
  9. Two founders pretended to get along, while back-chanelling with investors about how to get the other out of the business.
  10. One founder diluted their cofounder’s stake (and influence) by investing their own money into the business on favourable terms. The other founder didn’t have money and couldn’t raise elsewhere, so ended up with almost nothing.

Of course, this isn’t always the case. Many cofounder relationships work out well.

But if you’re on the verge of signing half your company over to a cofounder, think twice. At the very least, invest in a proper founders’ agreement that enables you to unwind the relationship professionally if things don’t go to plan.

Or check out this post for an alternative approach.

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