This happens way more often than you might think. Congratulations on surviving to tell the tale, and best of luck with your next venture. These lessons will stand you in good stead, provided you recognize that this is only one way to kill a startup. Trust me, there are oh so many more...
(and product market fit is a necessary condition, but unfair advantage is where it is at)
thanks, I know that this happens frequently. But at the same time it feels so sad to shut down a company that was indeed starting to see pmf
> The co-founder demanded 10x what we could afford and threatened to sue the investor.
When this happens, you have to invert the offer and say that he can pay you that amount for you to leave instead.
We did it.
I proposed to give him my shares for FREE. He refused, knowing it was not capable of running the business.
On one hand, he told me the business value was in the millions. On the other, he would not buy the entire business for free.
Also, he always knew he could get some money suing the investor
Sounds like a solid learning experience.
It's also why I am incredibly hesitant to have a co-founder and it's why I went the bootstrapped approach instead of VC funding from the start.
yeah, problem is that is extremely hard to do it alone
My approach for the future: - Don't raise unless you really need to scale. Bootstrap as long as you can - Co-founders are ok, but with very clear pacts and shareholders agreement to manage conflicts
Don't forget vesting agreements with a 1 year cliff, exactly for situations like this.
Yes. First startup and jumped right at it, skipping the fundamentals.
I was not the only one though, the investor gave us a lot of money with a very bad shareholder agreement
It sucks, the people are everything. Integrity and execution are the main ingredients. The rest is luck. But no integrity or no execution and you implode. You literally just need integrity and execution.
agree, if you get these two right product market fit will follow
sorry to hear the stress that your cofounder caused. how did you know them before the venture?
cofounder arguments are common, esp in crypto. for your next venture, it's better to have a cofounder agreement with vesting schedule in place. once someone becomes irrational and unreasonable, it's a sign to get lawyers involved.
dont be too hard on yourself, happens to the best of us.
Cofounder was a uni friend. I was introduced to the investor by a common friend, but needed to do more dd.
Agree on the vesting. Rookie mistake. Also on the investor part - surprisingly they never asked it.
Will make sure to involve a good lawyer as soon as possible in the next venture
That's brutal man, wish you better luck ahead.
Granted I've only got started on this journey a few months ago, but I tried to find a co-founder and failed 3 times to find someone who I can trust and is capable. I think I'm just going to do it myself because counting on someone else at this stage while giving up significant equity to a bozo is a recipe for disaster.
Yes... Cofounders should be people that you have been knowing for years.
It is very easy to fuck it up
I feel like a lot of people just want to call themselves a founder. They don’t want to do research/sales outreach and they can’t help with building.
I’m a swe and I’ve done everything from cleaning pantries to delivering on 100 million plus projects. So I can do anything. But I also don’t know a lot and love learning and figuring stuff out. I wish I could find someone who could compliment me well.
This - co-founder conflict - is the #1 reason startups fail. Went through something very similar 2023-2024: legal, emotional drama, conflict, losing $$$ (legal, putting $$ into the company), another co-founder leaving
it's hard and brutal especially for first-time cofounders, but it's part of the process
Glad to hear I am not the only one...
It sucks for the time that it takes away from building a company. And it is one of the reasons I'll probably go for a standard job before starting a new one
If you're still reading this, could you say more about how you found your co-founder?
And do you have thoughts on how next time you'd go about picking one differently?
Uni friend. We had aligned interests. But the red flags have always being there.
Great question. I'll try to have a trial period on the job. Set a high bar for integrity and execution. And then legal vesting...
Thanks. Good answers.
For what it's worth, the people I've had the most success working with are people I've already spent some time working with. But yes to those other things too.
Sad to see this but thanks for posting as a cautionary tale. I think you made the right decision to resign. Hope you take care of your mental health and have some much needed rest!
Thanks. Hope other founders will see this as well... Cannot build an house without a good foundation
As an aside did you get some salary while working on it. Are investors happy for some of the 1.2m to be founder salary. Asking for a friend.
Yes but way below market rate. Honestly, that's my mistake, I could have negotiate it better and asked for more. I did not think about the worst case scenarios enough.
Good investors understand the benefits of founders mental health and should not push you to work for free.
why was it so hard to find a deal with the cofounder?
because he knew he either would get the buyout or the settlement money
What about just founding the next one alone? Will VCs still invest in that?
Yes, next time I will think very carefully about which investors to involve.
Disclaimer: I am not in a startup / tech hub. I realized that there are many more investors outside my geography. Professional investors.
Indeed I am leaving my country and starting new in another place
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