Entrepreneurs commonly select family members, friends, and/or significant others as cofounders – often assuming that these established relationships will facilitate positive relational dynamics that underlie venture survival and success. Scholars have examined the venture performance effects of familiarity in cofounder selection, but how quality cofounder relations develop is less understood, particularly between familiar cofounders who must navigate a complex intermingling of personal and professional influences. To address the implications of familiarity on cofounder satisfaction, we develop an integrative conceptual model that unpacks how familiarity as a selection criterion drives important relational dynamics, namely psychological safety, perceived equity justice, and reciprocity between cofounders, which explain satisfaction. Using longitudinal data collected at three time points from 284 cofounder pairs, we find that psychological safety and perceived equity justice mediate the relationship between familiarity on cofounder satisfaction. Counter to expectations, we do not find reciprocity between cofounders’ relational perceptions, however high reciprocity had an amplifying effect on cofounder satisfaction.
