Diligence assessed the founders. It hasn't assessed the operators they have to become.
The founder you backed has to become an operator the company did not need at the seed stage. This finds where that gap will strain a specific team, before it reaches the board.
Every round asks for a different founder.
of failed ventures were blamed mainly on senior management by their own investors (Gorman and Sahlman, 1989, as reported in Wasserman, The Founder's Dilemmas).
of nearly 900 venture capitalists surveyed named the team as a factor in their failed investments (Gompers et al., Journal of Financial Economics, 2020).
Capital raises the bar for running the company. Suddenly there are more people to lead, a board to manage, a faster clock, and senior hires who know more than the founder does in their own function.
Diligence didn't test for any of this. And founders tend to hide early friction from the people who hold board seats and decide on follow-on rounds, which is understandable, so you usually don't see the breakdown until the numbers do. You know what comes next: work slips, standards drop, and the co-founders stop telling each other the hard things. What's much harder to see is what set it off in this particular pair, and that's the part I work on.
Read: A New Perspective on Founder Due Diligence and SupportThe cost compounds the longer no one looks.
Friction between founders rarely arrives as a single expensive event. It starts small, usually somewhere you can't see it, and it gets more expensive at every stage it goes unaddressed.
Two founders who keep having the same unresolved argument lose hours to it every week, and those hours come out of the hiring, selling, and fundraising the company needs from them. Nobody records it, so nobody counts it.
A key hire stalls because the founders can't agree on the role, or a raise slips a month because they can't agree on the story. Every month of delay is a month of burn spent without the milestone it was meant to buy.
Senior hires can tell when the people at the top aren't aligned, and the good ones have options. Replacing one typically costs half to two times their annual salary (Gallup), before you count the months it takes the next person to get up to speed.
By year three, half of founding CEOs are no longer in the role (Wasserman). A co-founder split brings re-papered equity, a distracted leadership team, and a story every future investor will ask about.
Venture returns depend on a small number of companies. When friction quietly caps the outcome of one that could have been a breakout, the cost isn't a line item. It's a meaningful share of the fund.
The early stages are the cheapest to address and the hardest to see from a board seat, which is exactly where this work starts.
Support for founders and co-founder pairs.
I work with founders and co-founder pairs on the behaviors that decide whether a founding team holds as the company scales. The behavior causing the friction is usually invisible to the people causing it, so the first step is making it visible. In a pair, it's often a strategy each founder relied on early, one that was essential at the time and now collides with the other's.
Don't wait for a founding team to crumble.
Every engagement starts with a 30-minute conversation about the team you have in mind.