How to Fire Your Co-Founder?

The startup journey is not easy, it’s something like a roller coaster. It is more enjoyable when you are with your friend. It is true that if everything is fine, everything can go exactly the way you wanted it to. But before choosing your co-founder one should have to be serious. What if the co-founder you choose does not give you 100 percent of progress. it's hard to fire your co-founder as it involves emotions, legal aspects. Also the financial aspects of the company. Hence it is a cautious move. The collapse between the founding team is one of the reasons for startup failure. The entrepreneurial journey is not always happy and smooth,. unfortunately at a point will feel like it is not possible to work with your co-founder. Many situations will lead you to this. such as your founder is not devoted to the startup, or also a founder who does not agree with your ideas. it shuts down your dreams.

  • Personal reasons: There might be some personal reasons. Due to which he is not able to perform well in the startup. You should try to give him some time to recover from whatever situation he/she is in.
  • The difference of opinion: Another reason for this can be that he/she does not agree with your views. About the potential of the company and he wants to leave the startup. In this case, you should accept his resignation. Also from the day first of your startup make the equity distribution clear. Avoid any misunderstandings at the last minute. All the co-founders should have a clear idea about the profit sharing. Other critical aspects such as responsibilities.
  • Free rider: This condition is the trickiest one in which the co-founder is not working for the startup. But at the same time, he is not ready to resign.

The very first thing you can do when you are facing this difficult situation. To have a frank conversation with your co-founder about your differences. It will help you to understand the situation from your co-founder's perspective. Think out a plan for solving the issues. Create a document that contains a list of things that have to fix within the specific given time. This should be the last chance you are giving to your co-founder. If after doing all these things, you get to know those problems can not fix. you should think about whether you want to resign or ask your co-founder to resign. This will depend on how much equity each founder owns.


Also Read: How to Find the Perfect Co-Founder?


5 Steps To Take If You Need Your Co-Founder To Step Down

Steps to Step-Down Your Co-Founder

1. Come to a consensus with your other Co-founders, if any

You can have a clear and deep conversation between your co-founders. Tell them all the situation. Tell them why you think there’s no turning point from that situation, what do you do for your co-founder.

2. Find a lawyer

Discuss whatever situation you are in with the lawyer to know the best way to let your co-founder go. It will be better if you find a lawyer who has experience in the startup's environment. It also knows about the policy of separation of the founders. Tell him to prepare legal documentation for the termination.

3. Discuss with your lead investor

Discussing with your lead investors can help you to reach a fair outcome for both parties. You should reach out to your leading investor. To explain to them that you are dedicated to the success of the startup. it can only be achieved when the co-founder leaves. If your investors have board seats, you should try to convince them to fire your co-founder.

4. Determining the compensation

Determine how to compensate your co-founder. If you want to fire your co-founder. you may want him/her to hold no equity in the startup and to step down from the board position. In this situation, you have to compensate your co-founder with cash. The vesting schedule from the launch of the startup must be very important. You should consult all these things with your lawyer on all your options.

5. Communicating to various stakeholders

In case of a contentious breakup, you should prepare a story to tell your stakeholders. Try an appropriate way of communication to use to inform them about the story. You can tell them by sending emails, but it would be more preferable if you call or tell face to face. You should inform your main customers and suppliers about the current situation. if your co-founder was the only contact person for them. Also, you should appoint someone else for the contact person position. And provide them related details.

Think about whether you need to inform the press about this. you need to talk to your team, this situation may raise concern between the employees. They will start doubting the future of the startup. Thus, it is very important to choose your co-founder. If things go in the opposite direction that is unavoidable. Then you can take action towards your co-founder. Fire him according to the founder’s agreement.


Also Read: Kevin Systrom: Co-Founder of Instagram, The Home Of Influencers And Celebrities


What to do if you are the Co-Founder asked to leave

If you are the founder who is going to be fired, then you should remain calm. The situation may feel hard for you, you would not feel happy but no matter what you have to act mature. You should get a lawyer who knows about the startups and try to get a fair outcome out of it. You should not worry about your reputation as many great founders have gotten fired in the past. Most of the investors deal with the founder’s issues and understand this situation may occur.

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About Sweta

Software engineer, ambitious, passion for writing & a happy go lucky girl!!
  • Bihar, India
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