4 ms·

I am not a founder but this does not seem like sound advice. In a month, that 3% pittance becomes 10%. Also, it does not seem that the company has no value at a

by isatty 6y ago

I am not a founder but this does not seem like sound advice. In a month, that 3% pittance becomes 10%. Also, it does not seem that the company has no value at all, if it is primed to make money. The extrinsic value on the 40% is worth negotiating over and not giving it up and walking away. Nobody should do that unless there is gross misconduct or negligence involved.

bipson 6y ago
Potential worth != real money in the bank. Also, seen from the other side: They made a contract offering 40% in four years (conditionally) - most importantly only relevant when the company/idea survive that long and are thus profitable/worth something. Why should they suddenly pay this (or a meaningful fraction?) out after one year? Or give an "outsider" 40%, which will most certainly be difficult to explain to future investors?
- mijoharas 6y ago
  a standard vesting schedules is 4 years with a one year cliff. That means that after one year the person will have vested options worth 10% of the company. they will then accrue more options every month until they've fully vested their 40%. That doesn't mean they'll only get 40% after 4 years.
  - jacquesm 6y ago
    And typically when you are terminated without cause a good vesting contract will foresee in that and trigger the 'accelerated vesting' portion of the contract. Ditto with an early sale and possibly other trigger conditions.
mikeryan 6y ago
I’m spitballing here but maybe a middle ground is to convert some percentage of shares to equivalent to the seed investor shares. Assume, for the sake of argument, he was at one year and due 10%. Convert those share to the same terms as the seed investors. No cash upfront, equity is somewhat preserved and the rest becomes a source of potentially passive income. Note. He has to leave. The situation is now untenable.
- jacquesm 6y ago
  > He has to leave. Depending on how the investor looks at this that is not a run race, it may very well be the investor that sides with the OP and together they may be able to kick out the aggressor.
deleted 6y ago
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valuearb 6y ago
Unless his agreement has anti-dilution, or a favorable termination clause, the Technical founder owns nothing. The investor & founder can fire him/her, then dilute their vested shares to 3%, 1%, or even less. Meanwhile, at most the company can generate $5K a month in revenues. That’s not a business, that’s a part time job with a partner you cannot trust.

by isatty 6y ago

bipson 6y ago

Potential worth != real money in the bank. Also, seen from the other side: They made a contract offering 40% in four years (conditionally) - most importantly only relevant when the company/idea survive that long and are thus profitable/worth something. Why should they suddenly pay this (or a meaningful fraction?) out after one year? Or give an "outsider" 40%, which will most certainly be difficult to explain to future investors?

mijoharas 6y ago
a standard vesting schedules is 4 years with a one year cliff. That means that after one year the person will have vested options worth 10% of the company. they will then accrue more options every month until they've fully vested their 40%. That doesn't mean they'll only get 40% after 4 years.
- jacquesm 6y ago
  And typically when you are terminated without cause a good vesting contract will foresee in that and trigger the 'accelerated vesting' portion of the contract. Ditto with an early sale and possibly other trigger conditions.

mikeryan 6y ago

I’m spitballing here but maybe a middle ground is to convert some percentage of shares to equivalent to the seed investor shares. Assume, for the sake of argument, he was at one year and due 10%. Convert those share to the same terms as the seed investors. No cash upfront, equity is somewhat preserved and the rest becomes a source of potentially passive income. Note. He has to leave. The situation is now untenable.

jacquesm 6y ago
> He has to leave. Depending on how the investor looks at this that is not a run race, it may very well be the investor that sides with the OP and together they may be able to kick out the aggressor.

deleted 6y ago

[deleted]

valuearb 6y ago

Unless his agreement has anti-dilution, or a favorable termination clause, the Technical founder owns nothing. The investor & founder can fire him/her, then dilute their vested shares to 3%, 1%, or even less. Meanwhile, at most the company can generate $5K a month in revenues. That’s not a business, that’s a part time job with a partner you cannot trust.