Two strong founders, a market that was clearly there, and funds I respected already on the cap table. Everything you would want to see at that stage.
The problem was not the product or the market; it was the dynamic between the two people building it.
Co-founder breakdown does not announce itself in a pitch. It shows up 18 months later as slow decisions, conflicting priorities, and a fundamental breakdown in communication between them. The lead fund brought in coaches, tried mediation and attempted a buyout. When that failed, there was no mechanism to resolve the disagreement on price, and an early-stage startup cannot afford six months of that.
What I understand now is that the diligence question was never whether the founders got along. It was whether the relationship had the structure to survive the moments when they did not. Most diligence processes only ask the first one.
Two questions I ask in every founder meeting now, and what I am listening for.
"What is the last thing you genuinely disagreed on, and how did you resolve it?"
Even better - ask this of each founder separately. The content of the disagreement matters less than two things: whether they can name something specific and recent, and whether the resolution they describe is a real mechanism or just one founder eventually deferring to the other resentfully.
A founding team that tells you they communicate well and rarely disagree has not been tested yet. That is not reassuring. A founding team that can name a real conflict from the last 60 days, tell you how they worked through it, has shown you something that matters.
"If one of you decided to leave in the next twelve months, do you know exactly what happens to your equity?"
Most first-time founders have not had this conversation clearly. Vesting schedules with cliff periods exist precisely to protect the company in this scenario, but whether the founders have worked through the mechanics together is a different question. A founder who can answer this precisely, without hesitation, has thought carefully about the structural integrity of the relationship.
That gap will not stay theoretical forever. And by the time it becomes relevant, it is significantly harder and more expensive to fix.
Think about a deal you have invested in or are currently looking at with two or more co-founders. Then ask yourself: if you put both founders in a room separately and asked them what the other one does better, would the answers match?
If you are not sure, that is worth knowing before you write the cheque. Reply and tell me what you find. I read every reply and the patterns shape what I cover next.
I have seen this same situation resolve very differently in another company. Same type of breakdown, completely different outcome. The difference was not the founders or the business. I walk through both in this week's video, including what I look for now because of it.
Warmly,
Rupa
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