The right way to handle your co-founder’s exit It’s usually more beneficial in the long term to simply end the relationship than to try and convince your co-founder to stay on. In the latter scenario, if you are unable to come to a resolution and your co-founder does not choose to leave voluntarily, you and your team may decide that it’s better to terminate your co-founder to avoid further difficulty. Or, perhaps your co-founder can no longer fulfill the duties of their role as agreed upon when they joined your startup. Your co-founder and your team may not align on your startup’s direction or have fundamental disagreements about how your startup should be run. More likely is that your co-founder leaves due to conflicting interests or because they are simply no longer a good fit. They may also have personal reasons, such as educational obligations or financial burdens.
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#ZIPCAR FOUNDERS PROFESSIONAL#
In some cases, your co-founder may choose to leave in order to pursue other professional goals, whether that’s a full-time role at another company or going out on their own. There are a number of reasons why your co-founder might leave your startup, and it is certainly not an uncommon event in the startup world. This is mainly to prevent a situation in which your co-founder leaves and is in possession of your company’s creations, opening the door to potential competition. It’s also a good idea to create a founder IP agreement that includes terms that clearly define what happens if your co-founder leaves your startup. So when the relationship went south shortly after they went into business and Chase fired her co-founder, Danielsen retained half of the company she wasn’t even helping to build. Long before Zipcar became a hugely successful business and was acquired by Avis, Zipcar founder Robin Chase very quickly entered a 50/50 equity split with her co-founder Antje Danielson. A vesting schedule will help protect you and your company, and can mitigate the risk of disputes over ownership if your co-founder decides to leave.Ī real-world example of what could happen if you don’t put thought into founder equity and responsibility in the beginning is Zipcar. You should also make sure to have a shareholder agreement that includes vesting provisions for founder shares. Creating a Founder Accord that details founders’ roles and responsibilities is a good way to help prevent future disagreement. There are certain measures you can take early on to help make a co-founder exit situation easier to deal with.
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A co-founder leaving can have a big impact on your startup, particularly when you’re in a fundraising phase, so you want to ensure that you take the appropriate actions and do so legally. But, as with any relationship, your partnership with your co-founder may ultimately not work out.
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The individual you bring on board is more than just a business partner they’re someone with whom you plan to cultivate a long-term relationship. Choosing the right co-founder is one of the most important decisions you’ll make in your startup’s life.