"Deliberate teams outperform convenient ones, meaning familiarity correlates with worse exits. Founders who had worked together before starting a company produced 21% lower exit valuations than founders who hadn't."
"When the default is proximity, a founder isn't deliberately finding the teammate who fills their gaps. Instead, they are selecting for comfort, and comfort doesn't always produce results."
"Sharing a relationship built over years in the same class or company means shared perspective and overlapping blind spots. Pre-existing social relationships also make hard conversations even more challenging."
"What did correlate with stronger exits? Startup experience. Founders who had previously worked at a startup (even one that failed) produced better outcomes."
Selecting cofounders based on trust and familiarity often results in lower exit valuations for startups. A study of nearly 350 U.S. tech IPOs revealed that teams formed from prior relationships underperform compared to those formed deliberately. Founders who had previously worked together saw 21% lower exit valuations, while those who attended school together experienced 7% lower valuations. In contrast, startup experience correlates positively with stronger exits, indicating that comfort in relationships may hinder performance and decision-making.
#cofounder-selection #startup-performance #exit-valuations #familiarity-vs-deliberation #founder-experience
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