Choosing a co-founder, or deciding not to

This article is general information, not legal or financial advice. It was written on October 10, 2026 and describes United States sources only. Ask your own counsel what applies to you.

Advice about co-founders usually arrives as a conclusion: always have one, or never. Neither is a reliable rule, and this article does not offer one. It treats the choice as a decision about work first and ownership second, and it includes the option that is easy to overlook, which is to decide not to have a co-founder.

The key distinction is this. A co-founder is not only someone who does a share of the work. A co-founder is someone who owns part of the company. Work can be done by employees, contractors or reviewers. Ownership cannot be undone as easily, so it deserves a separate and slower decision.

Step 1: List the work before you list the people

The GOV.UK Service Manual, written for UK public services, includes a list of what any service team needs to be able to do. Public services are not startups, but the list is a useful prompt because it is plain and complete. It includes skills to “design, build, test and iterate software, and deploy and host the software”, to “test with real users”, to “measure the performance of the service” and to “support the live running of the service”. It also names understanding user needs, setting priorities, managing stakeholders, security and handling data.

Translate that into your own company. On one page, list the capabilities your first year requires, using your own words. A typical list for a software company covers the following:

• Finding and understanding customers, and selling to them.
• Deciding what to build and in what order.
• Building and running the product.
• Keeping customer data and accounts secure.
• Handling money, contracts and compliance.
• Supporting customers once they exist.

The same page says a team’s size and the roles it needs “will change as you build your service.” Your list for the first six months is not the list for year two, so date it.

Step 2: Mark how each item is covered

Next to each capability, write one of four marks:

• Me. I can do this to a standard I would accept from someone else.
• Buy. I can pay a contractor or an employee for this.
• Borrow. I can get a review of this from someone outside the company, as a one-off or on a schedule. A separate article in this desk, on where a second pair of eyes comes from, covers how.
• Gap. Nobody is covering this, and I cannot yet say how it will be.

The Service Manual’s guidance on working with contractors helps with the “buy” mark. It advises you to “only buy the skills you need and not to lock your service into a long contract with a fixed cost.” For capabilities that are needed for a period, not permanently, that is a reason to prefer a contractor to a partner. The research brief on dedicated teams, agencies and freelancers compares the ways to buy, and the team composer can help you see the roles you need.

Count the gaps. A co-founder is one possible answer to a gap that is large, permanent and central to the company. It is rarely the only answer to a small or temporary one.

Step 3: Understand what ownership adds

The U.S. Small Business Administration describes the structures through which two or more people can own a business. It says that “Partnerships are the simplest structure for two or more people to own a business together,” and that a corporation “is a legal entity that’s separate from its owners.” It also notes that an LLC “operating agreement” is a document that “defines how key business decisions are made, as well as each member’s duties, powers, and responsibilities.”

Those sentences describe the entities and their paperwork. They do not describe what a particular co-founder arrangement should say. The point to take from them is that when two people own something together, the rules about decisions, duties and powers are not automatic. They have to be written, and which document holds them depends on the structure you choose. The SBA also says that “Consulting with business counselors, attorneys, and accountants can prove helpful” in choosing a structure.

Step 4: Questions to settle in writing, with counsel

This article does not say how ownership should be divided or what an agreement should contain. Those depend on your facts and your jurisdiction, and a lawyer should draft or review them. It can say what questions the agreement exists to answer, so that you raise them before you are committed:

1. Roles and decisions. Who decides what, and what happens when you disagree?
2. Time and commitment. Is each person full-time or part-time, and what happens if that changes? The choice of when to move from part-time to full-time is a separate decision, covered in another article in this desk.
3. Departure. What happens to a person’s ownership if they leave, stop contributing or want out? The answer can be harder to agree after the event than before.
4. Intellectual property. Who owns the code, the designs and the name, including anything made before the company existed? Section 204 of the U.S. Copyright Act says a transfer of copyright ownership “is not valid unless an instrument of conveyance, or a note or memorandum of the transfer, is in writing”. Ask counsel what that means for work each of you has already done. The IP, contracts and access article describes the records.
5. Money. Who puts money in, who is paid, and how are costs shared in the early months?
6. Disagreement. How will a deadlock be resolved if you cannot agree?

None of these is hostile. They are the questions a partnership has to answer at some point, and the only choice is whether to answer them early, on friendly terms, or late.

Step 5: Test the fit with real work

A candidate co-founder can look right on paper and be wrong in practice, and the reverse. Before ownership is discussed, do a small piece of work together with a clear end: a set of customer conversations, a prototype of one flow or a one-page problem brief. The customer interview guide and the validate the problem playbook offer tasks of the right size.

While you work, watch things that are hard to see in an introduction: how the other person handles being wrong, how decisions get made when you disagree, whether they do what they said they would, and whether you would want to work with them when the project is going badly. This is observation, not evidence in any study, and it is as useful as the care you put into it.

Deciding not to

Choosing no co-founder is a legitimate result of this exercise. It tends to follow when the gaps you counted are small or temporary, when you can cover them by buying skills or arranging review, or when you cannot yet find a person you would want to share ownership with. It does not mean you must stay alone indefinitely, and the decision can be revisited. Ownership, once granted, can be hard to undo, which is a question for counsel.

What this article cannot tell you

This article rests on two pages of UK public-service guidance, one U.S. government small-business guide, one section of the Copyright Act and reasoning. It does not measure whether companies with co-founders do better than those without, and it should not be read as saying they do or do not. It does not say how to divide ownership, how to value contributions, or what an agreement should say, and it does not cover tax, funding or employment law. The Service Manual was written for government teams, so its list is borrowed as a prompt. Check the current text of each source, and ask counsel before you sign anything.

In the data

These figures describe U.S. businesses in general, not WE’s results. Each one names its source.

• 20.4% closed in year 1
• 29.4% closed in years 2 to 5
• 15.5% closed in years 6 to 10
• 34.7% still open at year 10

Each square is one in every hundred establishments that opened in 2015. Squares are rounded so they add to 100; the exact figures are in the table.

Show the data as a table

Of 100 establishments that opened in 2015, how many were still open at year 10

Group	Exact figure	Squares (of 100)
closed in year 1	20.4%	20
closed in years 2 to 5	29.4%	29
closed in years 6 to 10	15.5%	16
still open at year 10	34.7%	35

Source: U.S. Bureau of Labor Statistics, Business Employment Dynamics, Table 7 , Data through March 2025

Retrieved 2026-10-15. Each share is a difference between two published survival rates (all private industries); the squares are rounded to add to 100.

Sources

1. Set up a service team at each phase, GOV.UK Service Manual, Government Digital Service . Accessed October 10, 2026.
2. Choose a business structure, U.S. Small Business Administration . Accessed October 10, 2026.
3. Working with contractors or third parties, GOV.UK Service Manual, Government Digital Service . Accessed October 10, 2026.
4. 17 U.S. Code section 204, Execution of transfers of copyright ownership, Legal Information Institute, Cornell Law School . Accessed October 10, 2026.

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