Why startups should start preparing now for a potential founder breakup

When Rosie Nguyen resigned from her startup Fanhouse in July, she felt like she was losing a child. Nguyen wasn’t ready to leave, but she wasn’t on board with where the company was headed, either.

When Fanhouse’s board, which consisted of her co-founder and an investor, decided to sell the company and pivot to AI, she knew she needed to resign; she started the company to help creators, not ride industry trends to make the most money.

“It was definitely a very painful process,” Nguyen told TechCrunch+ about leaving the startup, which connected creators with their fans. “Fanhouse was a baby to me, a company that I really, really cared about and started about my own needs. I used it myself to provide for my family. Not having the company anymore meant losing not just my income and job but also this part of my creator identity.”

Founders exiting, or founding teams breaking up, is not an uncommon occurrence in startup land. Many separations are painless, like when a founder decides they want to build something else or take a different job. But sometimes they can be messy, involving lawyers and resulting in people feeling burned.

In a market where capital is harder to come by — and startups have largely already cut all the burn they can — 2024 is looking tough for founders. Some companies that are waiting until next year to raise could still find that they can’t. Many founders could face pressure from their investors or with hard choices concerning where their company should go next. Founders aren’t always going to agree, and complicated breakups might become more common.