Power struggles and rifts are so rife among new businesses that co-founders often opt to go their separate ways, new research from Fuel Ventures reveals
Launching a new enterprise is a daunting experience. Understandably, many entrepreneurs avoid going at it alone and are often encouraged by investors to find co-founders who complement their skill sets. However, all the tension of getting the venture off the launchpad is a breeding ground for conflict. In fact, almost half of founding teams end up splitting up because of internal arguments, according to new research from VC firm Fuel Ventures.
Having surveyed over 3,000 UK business owners, it found that 43% of entrepreneurs are forced to buy out their co-founders due to rifts and power struggles. Looking at the two-fifths of startup leaders who’d split up the founding team, 71% said the breakup was due to differences of opinion on the company’s direction and 18% felt it was because the ousted co-founder didn’t share the venture’s values. In 92% of the cases, the final uncoupling was due to a single specific disagreement regarding a decision-making, which was usually the culmination of a period of unrest among the founding team.
Given their bad experience, it’s no surprise why 73% of the founders who’d experienced a split said they wouldn’t want to go into business with a co-entrepreneur again, preferring to fly solo for the second time around. Of the ones who would, 81% would only do it with someone they knew really well.
So why did they end up with a co-founder in the first place? 57% said it was because they’d been more comfortable with a co-founder and a third felt obliged to include the partner in the business after coming up with the idea together.
Commenting on the research, Mark Pearson, founder of Fuel Ventures, said: “For entrepreneurs all over the globe, having a co-founder offers a great source of confidence, as well as giving people a great chance to bounce ideas and concepts around and if the relationship is good, a co-founded company can be extremely successful. However, as our research shows there can be some negatives to having a co-founder, particularly if you don’t share the same business beliefs, values or ethics.”
All entrepreneurs feel a lot of pressure when they launch a business. So it’s understandable why conflict in the founding team may occur. Luckily, they’re avoidable as our guide on how to prevent co-founder disputes show. On the other hand, breaking away from a co-founder that isn’t pulling their weight can be just what your business needs. At the end of the day, it’s up to you to make the decision about the future of your startup.