Nearly half of co-founders buy their business partners out – survey

Most common reason for co-founders to split is disagreement over the company's direction, says new research.

More than two fifths (43pc) of company founders are forced to buy their co-founders out of their businesses due to rifts and power struggles.

The most common reason for founding teams to split is a difference in opinions over the company’s direction, according to a survey by venture capitalist Fuel Ventures.

Of the 43pc of founders who’d been forced to buy out their fellow co-founder, more than two thirds (71pc) said it was due to “a difference of opinions for the company’s direction”, while 18pc said they felt their former partner “didn’t reciprocate their beliefs/values”.

And nearly all of those founders who’d split said the schism was triggered by “a single specific disagreement”, following a period of dispute or unrest within the founding team.

Nearly three quarters (73pc) of founders said they would never co-found a business again. And 81pc of those who would consider co-founding a business again said they would only do it with someone “they knew well”.

As to why entrepreneurs felt they needed a co-founder, 57pc of those surveyed said they felt more confident and comfortable having someone to run the business with, while one third (32pc) said they felt obliged to have a co-founder, having come up with the idea together.

Fuel Ventures surveyed more than 3,000 UK-based founders and co-founders.

3 tips to avoid splitting with your co-founder

Fuel Ventures has suggested three ways for co-founders to avoid rifts and ensure business owners have a sturdy and efficient founding team:

Plan out your business’s path before launching

Coming up with a business plan is the bread and butter for any entrepreneur thinking about launching. However, by planning the route you want your business to take, it will become clearer as to whether your beliefs and goals align with those of your co-founder.

Talk to your co-founder about your concerns

If something about your co-founder is unsettling you, or if you feel unease or worry about your business and its direction, talk to them about it. Often founders will keep their worries to themselves rather than just clearing the air with their co-founders and addressing issues with the direction of their company. Whether it’s the first day of trading, or 10years in, working with your co-founder rather than against them is the best way to stop rifts happening – even if you don’t agree with everything they want to do.

​Consider a third co-founder or silent partner

​Having a third voice means that you will almost always be able to come to a majority decision, which will obviously help you steer clear of any heated disputes or long winded debates. Whether this is through a third co-founder, or a silent partner who sits above the day-to-day running of the company, having a third voice can help keep everything ticking along efficiently.

Further reading

Top tips for writing the perfect business plan

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Tim Adler

Tim Adler is group editor of Small Business, Growth Business and Information Age. He is a former commissioning editor at the Daily Telegraph, who has written for the Financial Times, The Times and the...

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