In the fast-pace world of startups, the team you build is as crucial as the idea itself. However, what do you do when your co-founders, once passionate comrades on your entrepreneurial journey, become the anchors dragging your venture down?

The Dilemma:

A reader shared a candid struggle within their tech startup. Despite the shared dreams and initial enthusiasm, two co-founders have fallen short in both financial commitments and active contribution, jeopardizing the startup’s progress. One co-founder hasn’t invested the agreed amount, while the other, despite being a skilled software engineer, is lost in the management aspect of the venture. The situation is further complicated by their longstanding friendships, making any decision to part ways emotionally charged.

I asked experts and survey other founders within our network. The entrepreneurial community didn’t hold back, offering a range of solutions from parting ways to addressing the leadership void. The consensus leans towards action – confronting the issue head-on, reassessing co-founder agreements, and, if necessary, restructuring the team to align with the startup’s needs. I have organized their advice and group them into the following 6 strategies with practical steps.

Open Communication:

Initiating an open and honest conversation is paramount. Schedule a meeting dedicated to discussing the state of the startup and the contributions of each co-founder. It’s crucial to create a safe space where everyone can openly share their challenges, expectations, and visions for the startup. Emphasize the importance of transparency and the collective goal of the startup’s success.

Practical Tip: Use specific examples to highlight where contributions are lacking and discuss the impact on the startup. Allow each co-founder to express their side, and listen actively to understand their perspectives and any underlying issues.

Re-evaluate Commitments:

Reassess the initial agreements made between co-founders. It might be necessary to realign roles based on the current situation, capabilities, and interests of each member. Consider adjusting equity shares to accurately reflect the contributions and involvement of each co-founder.

Practical Tip: Draft a new agreement document that outlines revised roles, responsibilities, and equity distribution. Ensure that all co-founders agree and sign off on this document to prevent future disputes.

Set Clear Expectations and Deadlines:

Clear, measurable goals and deadlines provide structure and accountability. Outline what is expected from each co-founder in terms of contributions, both financial and operational, and set realistic deadlines for these contributions to be made.

Practical Tip: Use project management tools to track progress and hold regular check-ins to assess each co-founder’s contributions against the set expectations. Celebrate achievements to maintain motivation and address any lapses immediately.

Consider a Leadership Change:

If the startup is suffering from a lack of direction, appointing a decisive leader or CEO may be necessary. This person should have the authority to make tough decisions and the vision to lead the company towards success.

Practical Tip: Evaluate the strengths and leadership qualities of each co-founder to determine the best fit for the CEO role. Alternatively, consider bringing in an external candidate with a proven track record in leadership within your industry.

Legal and Financial Safeguards:

Consult with a legal advisor to navigate the complexities of restructuring your team. Ensure that any changes in roles, equity, or involvement comply with your shareholder agreement and protect the startup’s interests.

Practical Tip: Before making any changes, review your existing shareholder agreement to understand the legal implications. If necessary, draft amendments to the agreement with the help of a legal professional.

Parting Ways, If Necessary:

If, after all efforts, co-founders are unable or unwilling to meet the requirements, it may be necessary to part ways. This decision should not be taken lightly, especially when personal relationships are involved, but the startup’s well-being must take precedence.

Practical Tip: Approach the conversation with empathy but firmness. Outline the reasons for the decision and the process for their exit, ensuring it aligns with legal agreements. Offer support in their transition out of the startup to maintain a positive relationship post-exit.

Moving Forward with Purpose:

Dealing with co-founder troubles? You’re definitely not alone. It’s like navigating a ship through a storm—challenging but doable with the right approach and mindset. Whether it’s about having those tough conversations, reshuffling roles, or even parting ways, the aim is always to keep the startup dream alive and kicking.

Got any stories or advice from your own journey? We’d love to hear them. Sharing is how we all grow, after all. Drop your thoughts or experiences in the comments. It’s through our collective wisdom that we can guide each other through the choppy waters of entrepreneurship.