A Cautionary Tale on Choosing Co-Founders
If you’re considering starting a company, beware the ‘shotgun wedding.’
A quick cautionary tale…
Week 1: We meet two insanely impressive co-founders. The pitch is compelling. They’re clearly brilliant. But they’ve only known each other for a month.
Week 2: We get an email. The co-founders have broken up.
Whiplash at this speed is rare, but breakups unfortunately aren’t.
From Carta’s new data: more than 25% of VC-backed two-founder teams lose a co-founder within four years. And even more tellingly…
Year-one splits are up ~50% over the last decade.
As more money flows into the system, there are more shotgun weddings and thus divorce rates are sky-rocketing.
There’s a reason VCs ask about the relationship depth between founders. Building a venture-scale company is difficult enough. Doing it on a shaky foundation is almost impossible.
You’re marrying each other. Then you’re marrying your cap table. That’s a lot of people who need to stay together for the long haul.
Several of the founding teams we’ve backed literally fought in wars together. We’ve partnered with teams of sibling co-founders, spouses – multiple in the last year alone!
Of course, it’s rarely that extreme. One of the most common ‘meet-cutes’ in our portfolio is longtime colleagues who were frustrated by the same problem in their industry and left to tackle it together. That’s a great ‘engagement story’ too.
There are endless co-founder quizzes online designed to help you think through the ‘big questions’ (goals, timelines, finances/equity, etc). They’re valuable, you should take some! But don’t underestimate the ‘soft’ details of lifestyle and values.
Like a spouse, your co-founder’s reputation and finances will be intertwined with yours. Talk through questions like these too:
- Do you fly business or coach?
- Are you in it for the ‘quick flip’ or long haul to IPO? Is there a number that would change your mind?
- What are your team culture nonnegotiables? What are 3-4 specific steps you’ll take to lay the groundwork?
- In-person or remote? Will you flex for top talent?
- Have you given each other tough feedback and cried together?
While being a solo founder is insanely tough, it is multiples better than choosing the ‘wrong’ co-founder. Six months of deep collaboration before raising, for better or for worse, could save you six years of headache and heartbreak if it’s not the right match.
With AI, you can prototype for months and make real progress before you need a dollar of outside capital. Take advantage of that. Have a long engagement before you sign anything binding.
And if you go straight to the courthouse anyway, be prepared to convince VCs why you won’t end in divorce.
This advice isn’t new. But it never gets old.
