I assume that if there was a partnership agreement in place you'd have mentioned it, which means you are in a general partnership. I've been in this position –

I assume that if there was a partnership agreement in place you'd have mentioned it, which means you are in a general partnership. I've been in this position – twice! I'm sorry to tell you: if you don't have a signed agreement that specifies each of your obligations to the business, then you have very little recourse except to offer to buy him out, at whatever terms he'll accept. You can't fire him, you can't dilute his equity, you can't take the team and start over without him. You can't even really quit; you'll still be liable for half the partnership's debts. The only threat you can make is to dissolve the partnership, discontinuing the business and splitting its assets and liabilities. Which, given that you're almost out of cash, may be your best next step anyway.