Relationships between co-founders

How to set the foundation for future growth?

Starting a company is an exciting and challenging journey that can bring co-founders together as they work towards a common goal. However, it can also be a stressful and demanding experience that can lead to conflicts and tensions between them.

Several potential issues can arise, e.g.:

• different expectations for the company’s growth and development;
• diverging ideas about the co-founders’ respective roles and responsibilities;
• mismatched opinions about how ownership and equity should be divided between them;
• poor communication, misunderstandings and disagreements;
• personal conflicts or personality clashes that can make it difficult to work together effectively;
• burnout and stress;
• feeling that one partner is contributing more to the company than the other.

These issues can lead to confusion, tension and resentment, which in turn can create obstacles in the management of the startup and hinder its development.

It is therefore crucial for co-founders to formalise their relationship and to ensure that they are in for the long run. Here are some steps that co-founders can take to structure their relationship:

Discuss vision and long-term goals

Co-founders should discuss their long-term goals and vision for the company to ensure that they are aligned and working towards the same objectives.

Define roles and responsibilities

Clear roles and responsibilities should be defined for each team member to avoid any confusion or misunderstandings. It is important that each co-founder understands their role and the expectations associated with it.

Set up a clear decision-making process

Co-founders should establish a clear decision-making process to ensure that decisions are made in a timely and effective manner.

Address the strategy in an exit scenario

This topic is often a taboo for co-founders. However, they should discuss and agree on an exit strategy, such as a buyout or acquisition, in case one of them decides to leave the company at an early stage or later in the process.

Set up a dispute resolution process

A dispute resolution process should be set up in case conflicts arise in the future, and can include steps such as mediation, arbitration, or the involvement of a neutral third party. This can substantially help the startup survive a conflict between co-founders.

Draft a founders’ agreement

A founders’ agreement or shareholders’ agreement outlines the terms and conditions of the co-founders’ relationship, the rights and responsibilities of each founder, as well as the procedures for decision-making, dispute resolution, and the sale of the company. It can also include provisions regarding compensation, vesting of equity or transfer of ownership between founders.

Have regular check-ins

Co-founders should establish clear communication channels to ensure that everyone is informed and aligned around the company’s goals and objectives. Regular check-ins or meetings can help keep everyone on the same page and ensure that any issues or concerns are addressed as they arise.

Consider bringing in an advisor or mentor

Bringing in an advisor or mentor can provide valuable guidance and fresh insight on the company’s growth and development. Furthermore, since entrepreneurship can be a lonely journey, the support of a more experienced entrepreneur can be of great help for the co-founders to face their challenges and approach them with a different perspective.

Overall, by defining roles and responsibilities, establishing a clear decision-making process, and drafting a founders’ agreement, co-founders can set the foundation for a successful and long-lasting partnership and ensure that they are all moving in the same direction. Add to that mutual respect, transparency and positive communication, and you have the recipe for a healthy relationship between co-founders!

Contact us to structure the relationship with your co-founders and to make sure you are all working towards the same goal!