Bringing on a cofounder? Great.

But before you get caught up in the excitement of building your startup, let’s talk about something most founders ignore until it becomes a major problem: compensation.

Here’s the thing…

Avoiding this conversation won’t make the issue disappear. If anything, it just means you’re setting yourself up for future tension, misunderstandings, and in some cases, a complete fallout. And trust me, nothing kills a great business faster than co-founder drama.

We had seen a lot in the firm, and many startups that go that route never recover.

A lot of early-stage founders assume that equity alone is enough to compensate everyone in the beginning. But let’s be real...

Equity doesn’t pay the bills.

 At what point does the company start paying salaries to the founders/cofounders?

What happens when one cofounder is struggling financially while the other is still comfortable?

And what about profit sharing?

 If and when the business starts making money, how will you divide it? Equally?

Based on contribution?

What if one cofounder has put in more effort or resources than the other?

If you don’t define these expectations upfront, resentment will build, and before you know it, the partnership will start to crack.

And when there is no legal agreement outlining this, you’re asking for conflict, confusion, and frustration.

There is also the issue of sweat equity.

 Maybe one cofounder is bringing cash to the table while the other is putting in all the work…

 How do you balance that?

Without a clear agreement, someone is bound to feel undervalued, and that’s a ticking time bomb for your business relationship.

The truth is that when the comes cofounder wahala…

Its relationships not the business that breaks down. And nothing strains relationships faster than money.

This talk can be uncomfortable I know which is why we always set up “the hard talk session” for our clients and their cofounders so that they have these conversations early enough especially when things are still getting started.

If you ignore them now, you’ll be forced to deal with it when things go bad—and by then, it’s usually too late and too expensive to fix.

If you’re serious about building a startup that lasts, don’t leave this to chance. Have the hard talk now and capture it in your founder’s agreement so that you are not forced to deal with it when things go bad—and by then, it’s usually too late and too expensive to fix.

Tag a founder who needs to hear this. Let’s talk in the comments! 👇