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So Your Co-Founder is Threatening to Quit Unless You Give Them More Equity. What Should You Do?

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27.06.2021

Harvard Business School professor Noam Wasserman famously determined that 65% of startups fail as a result of founder conflict. Startups have neither the time nor resources to litigate the dissolution of partnerships, or to divvy up ownership as circumstances change. Preventing and managing founder disputes is crucial. Let’s take a look at a specific incident of equity-related conflict between co-founders.

Related: Harvard Business School Professor Says 65% of Startups Fail for One Reason. Here's How to Avoid It.

Assuming that you are the majority owner of your company and can make equity decisions unilaterally, there are three things you should consider:

Is your co-founder being reasonable?

When you initially allocated equity to your co-founder, you may have been too conservative. There is no out-of-the-box equity allocation. Relatively equal splits can make sense, but they are not the norm. It is sensible to adjust initial equity between founders based on factors such as prior successful startup experience, one founder having worked on the idea first, or the critical value........

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