Angel Investing Dilemmas – When Founders Fight With Each Other

Running a startup can be stressful, and it’s not uncommon for co-founders to start squabbling with each other. There are many different issues that you need to tackle on a daily basis. And quarrelling can sap your energy and common-sense.

You may find that you are running out of money; it’s hard to find the right talent; the new employee doesn’t seem to be performing as expected; the product is taking much longer to develop because you run into unexpected snags and your investors are breathing down your next because you have failed to meet the milestones you promised to achieve when raising money.

Why Co-founders Fight

It’s hardly surprising that co-founders stop seeing eye-to-eye on multiple issues. There are no simple answers to the many challenges which confront you daily, and it’s quite common for them to champion different solutions because their perspectives vary. Often the quarrels become a daily affair and they find that they don’t want to continue working as a team anymore.

How do they split up without harming the company? Who gets what share of the equity? Does their agreement cover what they will do in these circumstances? And when do they let their investors know that they are going to part ways?

These disagreements often lead to the company spiralling downwards. They harm company moral, because employees can see that the founders are disagreeing with each other, and they start worrying about their jobs.

When Investors Get Worried

Investors also start worrying, because they have invested in the ability of the team to create a world-class product. If the team is spending its time fighting with each other, how are they going to be able to deliver what they promised?

Investors hate being trapped in this kind of situation. As a board member, you want them to patch up so that the company remains on track, but what do you do when they say that they cannot stand each other?

You are not the judge who can decide who is right and who is wrong – you can’t be seen to be taking sides because they are adults who need to learn to resolve their own disputes. Neither are you a policeman who can beat them up in order to make them see sense. And you are not a father figure who is trying to get squabbling siblings to kiss and make up either.

You can’t babysit and mollycoddle them, stroke their egos and try to get them to patch things up. They need to work their problems through for themselves – you can’t force solutions down their throat. All you can do is hope that they have the maturity to be able to deal with the issue without dragging the company down the drain.

Breaking up can be hard, but sometimes this is better for everyone concerned – not just for their individual careers, but for the company as well.

If they can’t stand each other, they start acting as obstacles and pulling each other down. This prevents the company from growing, because there is no unity of vision, and everyone is tugging in different directions. They start tripping each other up, which creates a negative atmosphere.

A clean break, at least, gives the founders the freedom to start exploring alternative options. While there will always be one of them who feels he has got a raw deal, there’s very little point in thinking about the sunk cost. They need to behave as mature adults and be thankful about what they’ve learnt from the journey, rather than wallow in the bitterness.

It’s far better to part on good terms, so you continue to respect each other, and recollect the happy times.

In Conclusion

Breaking up is like going through a divorce, and it can get messy. It does need maturity to try to reduce the damage this causes, and it’s a chance for the founders to show that they can be magnanimous because they used to be friends. When they started up and shared the same dream.

The investor can act like a marriage counsellor, and try to help them part amicably, but he cannot play the role of the judge who decides who gets what – that’s up to the founders to decide for themselves.

[This post by Dr. Aniruddha Malpani first appeared on LinkedIn and has been reproduced with permission.]

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