This content originally appeared on HackerNoon and was authored by Kishore Dasaka
They were two friends.
\ Met at a startup event. Built fast. Raised faster.
\n She was the tech brain. He handled growth.
\ Together, they pitched, built, hustled, and sacrificed.
\ Today, they don’t speak.
\ The board had to mediate. Legal notices were exchanged. The company didn’t survive. \n
What killed the startup wasn’t market fit, competition, or burn.
It was the absence of a founder agreement.
Most Startups Don’t Explode.
They slowly come undone - from the inside out.
\ In my role as a Fractional CFO, I’ve worked with over 250 founders - some on their way to $10M+ raises, others picking up the pieces after a painful fallout.
\n And the same pattern keeps emerging:
\
Founders avoid structure when they’re optimistic.
They need it most when things get complicated.
\n A founder agreement isn’t about mistrust.
\ It’s about protecting the business when emotions take over the decision-making.
\n Let me show you what that looks like.
🧨 When Things Go Well - The Greed Kicks In
\ The product hits PMF.
\ A big VC term sheet lands.
\ Revenue jumps. Your startup is on the map.
\ And suddenly:
- One founder says, “I’m doing more, I want more equity.”
- The other says, “We agreed 50-50. This isn’t fair.”
- Someone suggests making a hire that threatens the other’s role.
- There’s a $10M cap table — and no clarity on control.
\ I worked with a startup where the company scaled 5x in a year.
\ But the founders didn’t have clarity on decision rights.
\ No board structure. No CEO/COO distinction. No tie-breaker clause.
\ By the time Series A came around, investors backed out — they could see the tension.
\n Growth doesn’t heal misalignment. It amplifies it.
When Things Go Bad - And the Blame Starts
Traction slows.
\ You’ve cut salaries.
\ One founder is still grinding 14-hour days. The other is… not.
\n Now, it gets personal.
- “You’re not committed anymore.”
- “I’ve sacrificed more than you.”
- “You want to keep your equity but not show up.”
\ I’ve seen it unfold in tearful calls, backchannel chats, and boardroom breakdowns.
\ The founder who once said, “We’ll always figure it out,” is now calling their lawyer.
\ No agreement = no ground to stand on.
\ You can’t claw back equity.
You can’t reassign decision rights.
You can’t remove a non-performing co-founder.
\n And what’s worse - the team sees the cracks. Morale drops. Investors walk. Customers notice.
\n All because two people didn’t put their expectations on paper.
The Silent Killers: What Founders Never Talk About
Here’s what most founder duos never discuss - until it’s too late:
- Who’s really the CEO?
- What happens if one person wants to leave?
- Can either of us start something else on the side?
- Do we have to agree on every decision?
- What if one of us burns out?
\ These aren’t legal questions.
\ They’re human questions.
\ And when you avoid them, you create unspoken expectations.
\ That’s where resentment breeds.
\ I once worked with a company where both co-founders silently assumed they were the final decision makers.
\ For 18 months, they worked in parallel.
\ Then they collided - hard.
\ The board had to intervene. One walked away. The other never recovered morale.
\
Founders don’t fall out over percentages. They fall out over perception.
\
“But We’re Friends. We Trust Each Other.”
Every founder who’s ever told me that has meant it.
\ And every one of them was blindsided when the relationship shifted.
\ It wasn’t betrayal. It was a drift.
\ Life changed.
\ Pressure built.
\ Perspectives diverged.
\ And because nothing was written down, everything became a debate.
A founder agreement is not for when things go right.
It’s your seatbelt when things crash.. and they always crash somewhere.
\
What It Feels Like When There’s No Agreement
- You’re negotiating roles in the middle of product delivery.
- You’re talking equity splits while negotiating with investors.
- You’re making hiring decisions under emotional pressure.
- You’re Googling “how to remove a co-founder” at 2 AM.
- You’re whispering frustrations to your advisor instead of speaking openly to your partner.
\ This is not how strong companies are built.
You Don’t Need Legal Protection.
You Need Emotional Insurance.
\ You need something that says:
- Here’s who we are.
- Here’s how we operate.
- Here’s what we’ve agreed - in clear, calm, unemotional language.
- And here’s what happens if one of us leaves, breaks trust, or simply changes paths. \n
You don’t write a founder agreement because you think something will go wrong. \n
You write it because if something does, the business deserves to survive it.
Final Thought: The Agreement Is Not For You. It’s For the Company.
If your vision is worth building, it’s worth protecting.
\ If your relationship is strong, it can survive hard conversations.
\ If your company is growing, it needs more than chemistry - it needs clarity.
\ Don’t wait for friction.
\ Don’t wait for funding.
\ Don’t wait for resentment to show up.
\ Write it. Sign it. Move forward with freedom.
\ Because the founder agreement doesn’t kill momentum —
\ It’s what allows your company to scale without falling apart.
💼 About the Author
Kishore Dasaka is a Chartered Accountant and Fractional CFO who has worked with over 250 founders across India, Southeast Asia, the UK, and the US. He helps startups navigate governance, financial systems, and fundraises — before chaos costs them equity, trust, or control.
Learn more at https://kishoredasaka.com
This content originally appeared on HackerNoon and was authored by Kishore Dasaka
Kishore Dasaka | Sciencx (2025-05-21T21:49:43+00:00) The Most Dangerous Lie in Startups. Retrieved from https://www.scien.cx/2025/05/21/the-most-dangerous-lie-in-startups/
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