No, no, I'm sure your co-founder won't leave. No chance! ...but those other startups, they might have some relationship issues 😬 Here's the data. Criteria for inclusion: • We looked at 22,352 founders who were in 2 or 3 founder teams. • US startups incorporated between Q1 2016 and Q2 2023. • Had raised at least 1 round from VCs. The percentage in each row is the percent of founder who had left their companies over time. So for instance, for founders who got started in Q1 2017, 17.1% had left after 3 years. 𝗜𝗻𝘁𝗲𝗿𝗲𝘀𝘁𝗶𝗻𝗴 𝗦𝘁𝘂𝗳𝗳 • Looks like co-founders leaving is getting more common in more recent years. Nearly 1 in 4 founders had gotten out in 3 years for late 2021-era startups. • Is that increase in co-founder departures due to some underlying change in company structure - or is it just a reflection of the difficult fundraising environment post 2021? • Typically founders have a 4-year vest on their shares. That means that about a quarter of founders will leave before their vest is complete (although it may be a higher if the vest didn't begin until the first VC round). • Obviously 𝗲𝘃𝗲𝗿𝘆 𝗳𝗼𝘂𝗻𝗱𝗲𝗿 𝘀𝗵𝗼𝘂𝗹𝗱 𝗵𝗮𝘃𝗲 𝗮 𝘃𝗲𝘀𝘁𝗶𝗻𝗴 𝘀𝗰𝗵𝗲𝗱𝘂𝗹𝗲 𝗼𝗻 𝘁𝗵𝗲𝗶𝗿 𝗲𝗾𝘂𝗶𝘁𝘆. But the question of vesting schedule length has come up more frequently of late. Should founders move to a 5 or 6 year vesting schedule? I hear some VCs proposing this idea but most founders reject it outright. • This data is probably undercounting co-founder disputes, as sometimes a riff between founders actually kills the business outright. • This is, of course, a supporting pillar in the case for solo founders. No potential co-founder conflict to deal with! Not every business needs a founding team. The biggest choice you'll ever make at your company is: who are you building with? #startups #founders #cofounders
Interesting, This is a great chart to ask questions, but as you call out, not wise to make significant assumptions. I’d layer in macro (fundraising environment change, covid, etc) and then some qual (founder disputes, life changes, vesting shifts), to more clearly understand.
Peter Walker — Are you able to conduct an analysis focused on vesting schedules for General Partners in VC funds? As you know, transparency around GP vesting can be limited, and during due diligence, we encounter a broad spectrum of schedules—ranging from 0, 4, 5, to even 10 years. While some GPs approach this thoughtfully, the variability creates challenges for LPs.
I would be interested to know what percent stay on but in a diminished, non-executive role.
Interesting! Consistently with Travis Howell’s research that shows that solo founders … with the right support network … can succeed. My own belief is that solo founders have been under-rated for years and this will only be more true as AI becomes more powerful.
We get in, grind away in tech, all to retire to be chicken farmers. Get in, get out!
No doubt..picking who you build with shapes everything that follows.
Not that uncommon..
If a quarter to a third of co-founders will split within 4 years, and that likely ruins the prospects of the startup, then the conventional VC requirement for co-founders and stigma against solo founders is outdated and maybe even foolish. Shoe-horning co-founders on a project just to satisfy this outdated notion probably costs significant IRR points for fund returns.
Interesting data! I would peg this also down to just the rise in entrepreneurship over the last five years or so, and more specifically, the arrival of Gen Z in the workplace. Their generation is just much more entrepreneurial and has very different values. Do you have demographic data on the founders here?
ditch the co-founder, it's a made up thing