3.16Co-founders and the founding team

How each founder's role changes as the company grows

Stage: Pre-seedCore

1. Core idea and who it's for#

The job each founder does at 3 people is not the job the company needs at 30 or 300. At the start, founders do the work: run experiments, write code, build the prototype, sell to the first customer. As the company grows, the job becomes hiring people to do the work, then managing the managers, then setting direction and building the organisation.

Some founders grow into each new job. Others are better and happier in a different role, such as chief scientist instead of head of a 60-person engineering team. Problems arise when nobody says this out loud. The role quietly outgrows the person, the team suffers, and the change finally happens in a crisis, often forced by the board.

This playbook gives a way to:

  1. Map how each founder role changes across pre-seed, seed, Series A and beyond.
  2. Review roles regularly and honestly, as a normal process rather than a judgement.
  3. Choose a path for each founder: grow into the bigger role, move to a specialist or senior individual role, or hire an experienced leader alongside or above them.
  4. Make changes with dignity, keeping titles, equity and respect where they're deserved.

Who it's for: founding teams from seed onwards, especially technical and scientific founders in deeptech, whose roles change the most as R&D turns into product, manufacturing and sales. 3.17 covers the specific case of the CEO role.

The one-line rule: expect your role to change at every round, and choose the change before it is chosen for you.

2. Evidence#

Founder role changes are the norm, not the exception. Wasserman's data on about 10,000 startups shows that a quarter had replaced their CEO by Series A, and fewer than 40% still had their first CEO by Series D. More than half had changed CEOs by Series C. Other summaries of the research report that almost half of founding CEOs had been replaced within four years. The same pressure applies to CTO and other founder roles, though it is less studied.

Success itself triggers change. Wasserman's 2003 Organization Science paper describes a "paradox of entrepreneurial success": when a founder-CEO completes a key task, such as shipping the first product, the chance of being replaced rises sharply. Each new funding round also raises that chance, because the company needs different skills and investors gain more say.

Holding on to control has a cost. In a 2017 Strategic Management Journal paper, Wasserman found that each extra level of founder control, such as holding both the CEO role and control of the board, was associated with a 17.1% to 22.0% lower pre-money valuation. Strategy+business reports that it was also linked to 35.8% to 51.4% less financing raised. This is the "rich versus king" trade-off: founders who keep control often build smaller companies.

Founders who step aside often stay. Unlike large-company CEOs, founders who give up a role often stay in the company in another capacity, such as CTO, chief scientist, head of product or board member. Whether that works depends on how clearly the new role is defined.

Deeptech has extra transitions. Moving from research to engineering to manufacturing, and from grants to customers, changes what each founder needs to be good at. A scientific founder who led discovery may not be the right person to run manufacturing scale-up, but may be invaluable as chief scientist.

3. Method#

Step 1: Map how each role changes#

Stage
(rough
team size)		 CEO Technical founder
(CTO)		 Scientific founder
(CSO)
Pre-seed
(2 to 5)		 Does everything
commercial:
customers, grants,
fundraising		 Builds the prototype
hands-on		 Runs the key
experiments
Seed (5 to
15)		 First hires, investor
relations, first sales		 Leads a small team
while still building		 Leads the R&D plan and
a small team
Series A
(15 to 50)		 Builds the leadership
team, board, strategy		 Manages managers, or
moves to architect with
a VP Engineering hired		 Runs a research group,
or moves to a chief
scientist role
Stage CEO Technical founder Scientific founder
(rough (CTO) (CSO)
team size)
Series B
and later		 Leads executives,
capital strategy,		 Executive leader of
engineering, or senior		 Science strategy,
partnerships, scientific
(50+) culture technical individual
role		 advisory board

These are typical patterns, not rules. Use the map to start honest conversations, not to judge people.

Step 2: Review roles twice a year#

Each founder writes one page covering:

  • what the role needs over the next 12 to 18 months;
  • what they are great at;
  • what they don't enjoy or struggle with;
  • the role they'd most like.

Discuss the pages together, with an independent director or trusted adviser if possible. Make this routine from seed onwards, so it isn't a sign of trouble when it happens.

Step 3: Choose a path for each founder#

  1. Grow into it. Invest in coaching, a mentor who has done the bigger job, and training, and set clear milestones for the next 12 months.
  2. Specialise. Move to a role that uses the founder's strongest skills, such as chief scientist, chief architect, head of product strategy or head of partnerships. Give it real scope and influence, not just a title.
  3. Hire alongside or above. Bring in an experienced leader, such as a VP Engineering, COO or head of manufacturing. The founder shapes the hire and agrees how responsibilities split.

Step 4: Make the change well#

  • Decide together, and before a crisis. Ideally the founder proposes the change. Keep equity intact. Vesting continues if they stay in a real role. Reconsider equity only if the time commitment changes a lot.
  • Define the new role in writing, covering decision rights, reporting lines and how they work with the new leader.
  • Tell the story positively to the team and investors: "We're adding X so that Y can focus on Z."
  • Review after 3 to 6 months whether the new set-up is working.

Worked example (illustrative)#

A UK medical-imaging company has three founders: a CEO, a CTO (software and hardware) and a CSO (physics). At Series A, the team has 28 people, and is preparing for clinical trials and regulatory approval.

  • Role review: the CTO says she loves building the core reconstruction algorithms, but dreads running a 15-person team, hiring and planning releases. The CSO wants to keep leading the physics, and build academic partnerships.
  • Decision:
    • The company hires a VP Engineering with medical-device experience, reporting to the CEO, to run the engineering team, quality systems and releases.
    • The CTO keeps her title as CTO and chief architect, owns the technical roadmap and core algorithms, and has a seat on the leadership team.
    • The CSO becomes chief scientist, owning the science and clinical partnerships.
  • Equity and pay: unchanged for both founders. The VP Engineering gets a grant from the pool.
  • Result: release dates become predictable, the CTO's output on the core algorithms rises, and the Series B investors describe the leadership team as "balanced".

4. India, US and UK differences#

The dynamics of role change are similar everywhere. What differs is how much say the board and investors have, and the formal steps involved.

India#

  • Board control: Indian venture deals often leave founders with board control for longer than in the US, with investors holding protective rights through reserved matters. Founder role changes are therefore more often negotiated than imposed, but key appointments such as the CEO, CFO or CXO hires are usually reserved matters.
  • Formal roles: "key managerial personnel" (managing director, CEO, CFO and company secretary) have formal appointment and filing requirements under the Companies Act 2013. Changing who holds these roles needs board resolutions and filings.
  • Culture: in some founder-led Indian companies, hiring a senior outsider above a founder can be read as a loss of face. Framing the change as growth helps.

US#

  • Board power: after Series A, the board often has an investor majority, or an independent director who holds the balance. Boards can and do drive founder role changes, including the CEO. Founders keep most influence by raising issues first.
  • Employment: most US founders are at-will employees, so a role change is legally simple, but founders should check acceleration and "good reason" terms in their equity documents. A forced demotion can count as good reason for double-trigger acceleration after a sale.
  • Titles: the US market is used to founders moving from CEO or CTO to chief scientist, chief product officer or executive chair.

UK#

  • Board and articles: BVCA-style articles and shareholders' agreements give investor directors consent rights over senior hires and changes to founder terms. Investor majorities on boards are less common at seed than at Series A and later.
  • Employment law: founders are usually employees as well as directors. A significant change in role or pay without agreement can be a breach of contract or constructive dismissal, which in turn can affect good or bad leaver status. Agree role changes in writing.
  • Directors: stepping down from a role doesn't mean stepping off the board, which is a separate decision under the articles.

Scripts#

Starting the role review:

"Let's each write a page on what our role will need in the next 18 months, what we love, and what we're dreading. No judgement. I'd rather we design our next roles ourselves than have it happen to us."

A technical founder proposing a change:

"I'm at my best on the core technology, and I'm not the right person to run a 20person engineering org. I'd like us to hire a VP Engineering who I help choose, while I stay CTO and own the architecture."

To the team:

"We're bringing in a VP Engineering so that Priya can spend her time on the hardest technical problems, which is where she makes the biggest difference. Nothing changes about her role in setting our technical direction."

To the board:

"Here's our founder role plan for the next 12 months: what each of us will own, the two senior hires we need, and how we'll judge whether it's working."

Common mistakes#

  1. Waiting for a crisis. Changes forced by the board in a bad quarter are more painful and less well designed.
  2. Title inflation instead of a real role. A grand title with no scope tells everyone the founder has been sidelined.
  3. Hiring a senior leader without clear lines. If the founder and the new hire both think they own the same thing, conflict follows.
  4. Founder ego or guilt. Holding on to a role you don't enjoy or aren't suited to hurts the company and you.
  5. Ignoring the legal side. A one-sided demotion can trigger acceleration or employment claims.
  6. No review afterwards. New structures need checking. Adjust if it isn't working.
  • 3.04 Bringing in a business CEO
  • 3.07 Founder agreements: roles, decisions, deadlocks
  • 3.08 Assigning titles: CEO, CTO, CSO
  • 3.11 Resolving co-founder conflict
  • 3.12 Co-founder breakups: buybacks and good/bad leaver terms
  • 3.17 Replacing yourself as CEO
  • 5.04 Allocating equity by level

Sources#

This playbook is general information, not legal advice. Check your employment and equity documents before changing a founder's role. Last checked November 2026.

← 3.15 Co-founding across countries and time zones3.17 Replacing yourself as CEO →