Co-founder conflict ends more early-stage companies than competition does. The decision is reversible only at enormous cost, so it deserves the same rigour as an investment decision - evaluation, a trial period, and written terms.
What to evaluate
- Complementary scope - two people who cannot both own the same decision.
- Demonstrated ability in their domain, evidenced by work you have seen.
- Response to disagreement: how they behave when you are right and they are not.
- Financial runway and personal commitment level, stated in months.
- Alignment on the outcome: lifestyle business, venture scale, or an early sale.
Run a trial before you commit
- Work together on a real, scoped project for four to eight weeks.
- Include at least one hard deadline and one genuine disagreement.
- Split a small piece of customer discovery and compare the quality of the notes.
- Only then sign the founder agreement and issue shares.
Equity splits
Near-equal splits are the norm and are usually correct. Large disparities based on who had the idea create resentment within a year, because execution dwarfs origination in value creation.
Justify any deviation with future contribution, not past contribution: who is doing the work over the next four years, who is taking the salary cut, and who is carrying the risk.
- Standard: 4-year vesting with a 1-year cliff, for every founder, without exception.
- Include IP assignment and confidentiality in the same agreement.
- Define full-time commitment explicitly and what happens if someone goes part-time.
- Agree in writing how a departing founder's unvested equity is handled.
Conversations to have before signing
- Who is CEO, and how is that decision revisited?
- How do we decide when we disagree and cannot reach consensus?
- What salary do we take, and at what funding milestone does that change?
- What would make each of us want to leave, and what happens then?
- What offer would we accept for the company, and what would we refuse?
Warning signs
- Unwillingness to accept vesting on their own shares.
- A pattern of avoiding difficult conversations rather than having them badly.
- Commitment conditional on funding arriving first.
- Two people with identical skills and no clear division of ownership.