Cofounder Departure Rates by Year After Founding

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