A venture capital fund in London has revealed that 43% of company founders are forced to buy their co-founders out of their businesses due to rifts and power struggles.
Fuel Ventures surveyed more than 3,000 founders and co-founders across the UK and found that the most common reason for founding teams splitting was a ‘difference in opinions for the company’s direction’.
Of the 43% of founders who’ve been forced to buy out their co-founders, 71% stated it was because of a difference of opinion on the company’s direction, whilst 18% said they felt the co-founder ‘didn’t reciprocate their beliefs/values’.
The majority of respondents who’d split (92%), said that the split was catalysed by a ‘single specific disagreement’ regarding a business decision, following a period of dispute or unrest within the founding team.
The survey also asked founders whether they would consider co-founding again, with nearly three quarters (73%) stating they wouldn’t. Of the respondents who said they would co-found a business again, more than 81% said they would ‘only do so with someone they knew well’.
When asked what their main reason for having a co-founder was, more than a half (57%) of respondents said that they felt ‘more confident and comfortable with a co-founder’, whilst almost a third (32%) said they ‘felt obliged’ to have a co-founder, after coming up with the idea together.
Fuel Ventures invests in entrepreneurs who have the ambition to build a global, market leading company, with the passion and ability to execute. Fuel provides entrepreneurs with expertise and insights in business development, marketing and brand-building.
Fuel Ventures founder, Mark Pearson, said: “For entrepreneurs all over the globe, having a co-founder offers a great source of confidence, as well as giving people a great chance to bounce ideas and concepts around, and if the relationship is good, a co-founded company can be extremely successful. However, as our research shows there can be some negatives to having a co-founder, particularly if you don’t share the same business beliefs, values or ethics.”