Cofounder Split After One Side Built Everything

“What is the best way for a person to get his initial investment back from a company. It is a partnership. Is it best to just set it up as a loan and pay that person back over x number of years or just do it as dividend repayment? submitted by /u/HoosierHunter00 [link] [comments]”

“i think everyone ive spoken to so far only want the title (and the equity) [re: How do you know if you need a cofounder? I will not promote]”

“you're not naive, that's the right instinct. cofounder is about what someone owns and what they're risking, not the title. quick test: if they'd still want in at a normal salary with no title, they want the work. if the title is the whole ask, they want the story. plenty of good people are happy as employee #1 with real equity on a 4 year vest with a cliff. [re: How do you know if you need a cofounder? I will not promote]”

submitted by /u/Difficult_Copy_2191 [link] [comments]

“I left a roughly $200k guaranteed sales management job to join a residential HVAC startup with equity and the opportunity to eventually build and run the sales department. The expectation was $200–250k a year, but lead volume hasn’t been anywhere close to supporting that. My initial draw was $8k/month, and now they’re offering a $52k base plus commissions. Other partners have substantially higher guaranteed pay, so the setup has been frustrating. I also have 2.5% of the company in equity and was”

“Looking for advice from anyone who’s dealt with a 50/50 LLC partnership dispute in New York. Our business is approximately 8 months old, with less than $2,000 in physical assets. We have a few thousand followers on each of our social media platforms. I’ve personally invested a significant amount of time building the branding, marketing, and social media presence, along with handling much of the tax-related work, filings, and administrative responsibilities to keep the business compliant. The bus”

“Your company worth 5b also though? [re: Am I Being Scammed? (Startup Edition)]”

“How old is everyone in this story? [re: My childhood friends and I started a business together, but one friend's father is treating us like employees. I'm considering walking away. Am I overreacting?]”

“What’s the spilt in terms of ownership (not gonna read that novel). Does the dad have any ownership? Is the other cofounder better on the phone than you are? If you all own equal amounts and he’s better client facing the. Do what’s best for your equity and let him run that side of the business. If the dad put in no money tell him you’ve appreciated the advice he’s given but you no longer find value in future advice and move on. [re: My childhood friends and I started a business together, but one”

“So who’s making the sales? Is there actual sales being made? Closed deals? Not prospects. [re: My childhood friends and I started a business together, but one friend's father is treating us like employees. I'm considering walking away. Am I overreacting?]”

“How did your structure the business? As a formal partnership, with ownership percentages??? If you did so, you should also have systems and processes in place for handling things like this instead of getting all in your feels. Unfortunately, having any business with any family or friends does this at one point or another, isn’t just a reason to quit now. The other thing that maybe you disclosed, but your post was long, is what value the dad brings to the business… sounds like you trust him becau”

“See my other comment. I’d put everything on hold, sit down the 3rd guy and flat ask if he’s partnering with you two or the dad and then get it inked that minute. Step 2, tell that guy it’s his job to tell his dad to go away. Work stops if dad shows up on site. Tell him…. The friendship is on the rocks if he can’t tell his dad to back off. His choice, but he deserves to know. [re: My childhood friends and I started a business together, but one friend's father is treating us like employees. I'm co”

“The OP and I are both technical co-founders, and the original business idea was ours. Our non-technical co-founder has the business registered under his name with MSME registration, but we haven’t signed any formal agreement defining ownership or equity yet. His dad has also been interfering in the business, which is part of our concern. [re: My childhood friends and I started a business together, but one friend's father is treating us like employees. I'm considering walking away. Am I overreact”

“lawyer, and stop all progress forward… [re: My childhood friends and I started a business together, but one friend's father is treating us like employees. I'm considering walking away. Am I overreacting?]”

“Got to grow a backbone and tell the dad to keep out. [re: My childhood friends and I started a business together, but one friend's father is treating us like employees. I'm considering walking away. Am I overreacting?]”

“There is a difference between a scam and risky investment. If there was a 100% chance the company would make a $5bil valuation there is not way you'd get a $1mil of equity. Most start ups fail. What you gain is experience and a lottery ticket. It's on you to decide what each of those is actually worth. [re: Am I Being Scammed? (Startup Edition)]”

“I’m an early career FDE at an AI startup (i know, so unique right) and received an equity package of something like 0.0002% (might’ve been more like 0.0008% as employee #30 with a 1 year cliff and 4 year vest this means i’d get paid out 1mil for a company valuation of 5bil right? When I joined the company, I was pretty unaware of how equity at startups work. Now that I’ve been here for ~8 months and am working like 60-80hrs per week, I’m just trying to make sure that i’m not crazy thinking that”

“since you've already had a cofounder relationship go badly, i'd start with the work you actually need covered. is there a recurring decision or responsibility you can't handle well, or just more tasks than you have time for? before offering anyone a title, try a small, clearly scoped project together with expectations about compensation agreed upfront. see whether they take ownership without you assigning every step, and how you handle a disagreement. someone wanting the title tells”

“I mean it’s better than staying unemployed. But I attended a talk and the founder referred to her co founder and investors as second and third husbands. She said a shared debt is a shared burden and if you can’t call them up at 3am asking where the hell the report has been saved, it’s the wrong person or attitude. [re: How do you know if you need a cofounder? I will not promote]”

“Have any of you seen former investors surrender shares back to founders in order to keep the business going and get SOMETHING out of an exit rather than have the founders walk and wind down the business? If so, what was the process (other than "get a lawyer")? The investors in this hypothetical scenario are amenable and this would not result in a lawsuit. submitted by /u/EZEfromDET [link] [comments]”

“I’m genuinely concerned because my wife is one of the partners (not a big enough role to influence the decision) so our income is directly correlated to how well this app works. $80m rev will flow through this app next summer so it’s not something you want to mess up [re: Best analogy for non technical people building with ai?]”

“No serious capital partner signs this. You get the debt, the management risk, and the equity; they get repaid their principal and exit. It is a loan, not a partnership. Anyone who agrees to it is either not a partner or not serious capital. [re: Think It's Possible To Find A Capital Partner To Buy More Rentals?]”

“The CEO's ego is the liability here, not the debt. A clean exit happens when the founder realizes they are the problem. The messy takeover is when they don't. You can buy the business, but you can't buy out the person who ruined it. The math only works if he leaves. [re: How to navigate a corporate take over?]”

“fwiw offering a cofounder role with no idea, no revenue, and no equity structure defined is a tough sell for anyone good at growth. you might get more traction framing it as a paid micro-project first, then escalating to cofounder if it clicks [re: Looking for a potential third cofounder marketing, growth & business research]”

“the forecast part is on you anyway. if that backlog was real he'd of taken an earnout instead of arguing about it for three weeks [re: Hello Again & Other Tidbits on Acquiring a Business]”

“The numbers matter, but the ownership gaps are what usually break the first 90 days. Ask who can approve a hire, a spend above a set amount, and a contract change. If those answers are “the founder” or “we figure it out,” the business does not have a decision system. It has one person. That becomes your bottleneck the day the seller leaves. Look for written rows: one owner per decision, a threshold, and who is only informed. If those rows do not exist, price the time you will spend building them”

“Exactly. Earnouts can be tricky to structure, especially with SBA financing, but if a big part of the asking price is based on future growth, it's fair to ask the seller to share some of that risk. [re: Hello Again & Other Tidbits on Acquiring a Business]”

“I wouldn't see this as $480k vs $780k, it's actually $480k vs $380k, the $400k equity cannot be compared 1:1 to actual liquid stock/cash without being discounted for risk. Of course the equity might also balloon higher than $1.6M but you definitely need to assess the % likelihood that the company actually does make it to a liquidity event. IMO prediction markets are subject to regulatory risk, there is already plenty of movement against them and if this administration goes (and the Trump”

“So I have this dilemma. We are two co-founders. However, we want to make it the case that when I accepted to YC, only one stays on the board till the first institutional priced-equity or something like that, then the second founder joins. Is this an accepted practice, and common ? I checked this blog post "splitting-equity-among-founders" on YC, and it mentions by the end that a CEO only on the board initially before major funding is recommended. I am really interested to hear the diff”

“What's interesting is that no one is asking how your equity is structured. Because this defines what's possible and what's not. If I were you, I'd **absolutely** not have any internal conversations or with the board until you talked to an attorney specialzing in corporate law, and developed an exit strategy with their help - who to say to whom when an how. Until you consulted with a corporate law attorney, your "plans" most likely will get you in serious trouble, financ”

“That’s precisely what he refuses to do. [re: My cofounder sees communication as a burden and is questioning his sacrifice and our partnership. (I will not promote)]”

“it's OP not doing their due diligence and thinking they own part of the company that's.... a massive red flag lol Telling OP to consult an IP lawyer is a good way to burn through tens of thousands of dollars to arrive at the same conclusion: you didn't have a contract and it's not your IP. 🤷‍♀️ it's not gonna cost $10s of ks just to get an initial opinion, and whatever it does cost is the price to pay for fixing his fuck up. i'm certainly not gonna make absolute statemen”

“Idk this sounds more complicated and you’d also (presumably) need seed investors to sign off. Series A likely won’t give it to you because you didn’t have it before unless your company is a very hot deal and you have multiple term sheets. Rule of thumb for any VC deal is your terms only get chipped away at so put it in from the beginning and it’s harder for them to take away because you had it before, most times things never get added that are better for founders as you continue in to the series”

“choose something else, tying up a core competency into another company is a huge risk [re: WHO APPROVED THIS AND WHY??]”

submitted by /u/f00dstamps69 [link] [comments]

“ask what it costs to leave them lol. Like if you set up your own entity in a year and want to move people over, are there transfer or exit fees? Nobody thinks about that at the start and it’s usually buried in the contract. [re: what to ask before signing with an employer of record?]”

“I'd probably have taken the deal. Building a business is one thing, but scaling it to compete with the biggest players requires a completely different level of resources. The earnouts are a risk, but if the acquisition gives you the resources to grow much faster while still letting you build the product, it seems like a reasonable trade-off. Hard to turn down that kind of guaranteed money upfront, either. [re: Four months from launch to exit. This is the new world of business.]”

“I had spent my entire life preparing to take over my father’s business. And now I have just started taking over. Its family run. So my parents, my wife, and me are the board members. It has always been a debt heavy company. But the debt was always within payable limits. My mother controls the finances. Now i also make money for the company now, but the choice on how it is spent is determined by my mother. Her borrowings have recently inflated so much, the debt burden is increasing. I can quit th”

“How can one person of a 50/50 partnership handle strategy? That sounds like a recipe for disaster! [re: My cofounder sees communication as a burden and is questioning his sacrifice and our partnership. (I will not promote)]”

“Sounds like co-founder shouldn't be in charge of financials -- and yet you claim you're interfacing with investors without knowing financials intimately too? Tisk tisk. [re: My cofounder sees communication as a burden and is questioning his sacrifice and our partnership. (I will not promote)]”

“I’m assuming the CEO is also the major shareholder..? You need to discuss this now in the open with him before you commit more time and resources. And don’t count on someone else to do the dirty work for you. [re: How to navigate a corporate take over?]”

“Maybe. But really, he should have a very different vesting schedule since he's foregoing salary. No cliff, for sure, and accelerated. [re: Co founder equity and paying a salary to a senior member of staff with red flags - I will not promote]”

“7% is a fantastic deal once the company signs the paperwork and gives you the 7% they promised. Until then it's shit. [re: Co founder equity and paying a salary to a senior member of staff with red flags - I will not promote]”

“You promised equity in return for a pay cut, right? Have you delivered? If not, yeah, I do. You aren't trustworthy, and he's on commission, which depends on trusting you. [re: Co founder equity and paying a salary to a senior member of staff with red flags - I will not promote]”

“Girl. Say it with me. That's the entire point of the equity vesting schedule. He gets it over time as he shows performance. Unhappy with his current package? Of course he's unhappy, you agreed to his current package and you won't even give it to him. You don't have any prior rodeos under your belt here, do you? [re: Co founder equity and paying a salary to a senior member of staff with red flags - I will not promote]”

“In another comment you wrote: At the moment this is why I’m holding back, equity should follow effort, not equity before effort? That's true ONLY if that equity was tied to performance by mutual agreement. You can't promise him payment and then go "sorry, I changed my mind, because I'm not feeling it right now". You understand that, right? If you were an employee you wouldn't accept the owner not giving you your promised salary just because they changed their mind, righ”

“Hi there we have a lean start up with lots of early traction in the B2B LegalTech SaaS space. We onboarded a senior member of staff (55M) as a head of partnerships - stole from a large PE Backed competitor - we were paying a handsome salary which now we cannot afford. So we offered equity (7%, cliff and vesting over 4 years) plus £4k retainer each month to give him the comfort of paying family bills whilst working on something he really enjoys. Unfortunately, we’re not seeing much of a return wi”

“The question isn't how to keep them, it's whether the equity split still matches reality. Post Series B the company needs professional operators, and founders who wanted to build often discover they don't want to manage. Have the brutal vesting conversation before resentment does it for you. Most cofounder exits I've watched go bad went bad because everyone avoided the conversation for 6 months. Is this about money, role, or just exhaustion? [re: Cofounder considering leaving aft”

“talk to lawyer, nobody here will give you good advice without knowing details of all the contracts sounds like you have some problem with your cofounder(s). first check with lawyer on the contracts then just talk to them. be a grownup [re: Cofounder considering leaving after Series B - looking for advice *I Will not promote*]”

“Hi, we are two founders with equal split, and we want to know about dual-class structure and also the standards for removal from office terms that are standard. I read that the dual-class structure should be with sunset trigger to be investor friendly. And for removal (executive) is termination with or without cause. Can you give some insight on these two matters that we still have some doubt on them ? We are asking from a YC perspective. submitted by /u/Guitar1367 [link] [comm”

“It’s a real possibility that you get fucked out of your equity if you leave. I would speak with venture lawyers that have handled this kind of thing. [re: Cofounder considering leaving after Series B - looking for advice *I Will not promote*]”

“Thanks for the response - I think the consensus I am hearing now is between 2-4 months and a open upfront conversation about the transition. [re: Cofounder considering leaving after Series B - looking for advice *I Will not promote*]”

“Thanks I think given all the feedback this will be the direction to go. Transition plan with everyone on board and saving the relationships/referrals from the board and VCs involved. [re: Cofounder considering leaving after Series B - looking for advice *I Will not promote*]”

“Thanks I appreciate the response! I think given the feedback here and with real-life folks it seems that path forward will be: 1) square away any legal/financial questions 2) Bring it up to the founders/board with a transition plan and support with a 3-4 month horizon followed by advisor role as needed in exchange for severance pack. It is in everyone's best interest that this goes smoothly. 3) In the transition, make sure the severance package includes any items to cover issues arising from”

“This is heavily dependent on the agreements you signed. My law firm has handled some exits that were messy and some, not so messy, and it all depends on your agreements. [re: Cofounder considering leaving after Series B - looking for advice *I Will not promote*]”

“Thanks - after talking to a number of founders/VCs it looks like I am going to be giving a 3-4 month window and support for comms/transition in exchange for some items that I want. [re: Cofounder considering leaving after Series B - looking for advice *I Will not promote*]”

“You’re welcome! I should have mentioned I am a lawyer and that’s who I use. They only represent founders and startups, no investors. And Brian comes up with very creative solutions. [re: Cofounder considering leaving after Series B - looking for advice *I Will not promote*]”

“For the board seat - when we raised our B we went from a founder majority to an investor majority which reduced our founder seats. I was the founder who didn't retain a board seat. That in and of itself is not a problem of the 3 founders I would have also picked the other 2 to be those with the seats. Things have not broken down with the non-founder board members, board observers, or the cofounders. I am wrestling with the notice period which is what I am seeing feedback on. Now that I have”

“This is terrible advice. Don't do this shit with what is very likely $5-10M of equity on paper. You should absolutely read the docs but you have no idea what case law or precedent is if this gets ugly and gets litigated. That's why lawyers exist. [re: Cofounder considering leaving after Series B - looking for advice *I Will not promote*]”