What Do You Do When The Co-Founder Leaves Your StartUp

Co-Founder leaves Startup


You have a thriving start-up business, with your co-founder(s) by your side. With your combined knowledge of the business and passionate plans, strong relationship with your customers and contacts and significant experience in your market sector, your co-founders and you have managed to turn a vision into a flourishing company.

But, now one of your co-founders suddenly disappears or bails out. You are caught in a whirlwind with him gone and you have to survive without him. The initial shock and the anxiety of losing him quickly turns into frustration and fear.

For all start-up businesses, the founders and co-founders are invaluable. Losing any of its founder staff has a devastating impact on the business and its morale. But now the inevitable has happened and you must rethink your abilities to achieve your mission and keep the start-up from crumbling. Consider these strategies to manage your business when your co-founder leaves your start-up in a lurch midway.


1. Have a contract of partnership drafted at the most initial phase

The departure of a co-founder is a complicated scenario that happens with many startups. Hopefully, you have proper legal documentation that can prescribe the strategic procedures to be followed in such an event. An agreement should mention each founders’ ownership, contribution and decision-making rights, exit strategy and buyout terms. Having a clear exit strategy from the start ensures the buyout is less complicated. So, if you are conducting your business without a charted agreement, it is time to contact a business lawyer immediately.


2. Accept and reflect

What was to happen, has happened. There is no point in throwing a fit, you must accept it gracefully and think of the future course of action. You probably need to hire a new member to your business to fill in the gap. Finding the correct partner with appropriate skills may take time, so be prepared to run the business with a void in the interim. You may need approvals from other co-founders/board of members, before on-boarding a new co-founder. Be prepared for the disruption this will cause in the day-to-day working as well as long term plan of the company. Chart up an employee succession plan at the formation stage to soften the impact.


3. Communicate

You must communicate (and not just inform) with your staff, vendors and key customers about the departure of your co-founder. Employees may feel overburdened with the sudden unexpected event but use this opportunity to re-instill confidence. Employees must feel safe, to perform well and stay with the company for long. Instill confidence in your clients and customers that the business shall be conducted as usual. You may even want to involve your clients and your staff in the search for a new partner. Keep them informed.


4. Manage the transition phase

With your co-founder gone, you may have a difficult time handling your business. Move your focus away from the loss that you and your company have encountered. Retain your focus on your sales, employees, and customers. Communicate the situation to your team and key members associated with your company, along with how you plan to manage the transition. Gain and build their trust in the leadership skills of the team that stays. Calm their anxiety on how the company will be managed by charting the way forward for the company. If they know what’s happening, they will feel more confident and may even offer advice/help. Being transparent is the only way to keep things in control.


5. Ask for help

You may need to find a replacement to carry on the duties of the co-founder. If you find someone willing to help, enter into a short-term agreement and evaluate them.


6. Managing co-founders contribution

Evaluate your business and your co-founder’s buyout terms. Per the exit terms of co-founders agreements, your company may have to undergo outflow of cash to fund the buyout. Before you conclude on the buyout, consider other options. Once you have finalized the buyout plan, get the paperwork done with legal authorities, transfer the accounts and get your co-founder’s name removed from your official business agreements.


Reach out to us for more details on managing the exit and for business consultation.

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