This was the scenario which came before me few days ago-
Two friends, (keeping the confidentiality, consider their name as Ram and Shyam), set up a tech company. The arrangement between them was that Ram will contribute 'X' amount monthly for the venture against 1/3rd equity, and Shyam will work to create the product. An year had passed, the product was shaping up well but it still required another 10-12 months of development. Ram, meanwhile, due to personal reasons, could no longer afford to fund the venture, and this is where the conflict started.
Ram demanded his 1/3rd share as promised to him against the contribution made; Shyam denied to transfer the share as he is no longer contributing to the venture. Infact, the seeds of the conflict were sown the day they made the arrangement but didn't document anything.
This is where the role of co-founders becomes imperative. It's not just about documenting your understanding, but covering all the what if scenarios such as exits, acquisitions, closures, equity dilution, etc.
Even the best of friendships need clear boundaries in business.
Seal the Deal with Clarity 🤝
Co-founder conflicts are a leading cause of startup failures. Making a well-defined co-founder agreement is not just paperwork, but a crucial foundation for your venture's success.
Explore our latest guide to understand the essentials and safeguard your startup's future.
With Startup Movers, ensure your startup's backbone is solid and conflict-free.
#startupguide #cofounderagreement #fromstarttoscale
CEO at PDQ
2moShawn is one of the most underrated, successful and humble tech execs in Utah! And a genuinely good human... or is that his twin brother Shane? 🤣