4 ms·

Find a lawyer/negotiator with experience in this area you can talk to directly, high-bandwidth. They'll echo many of the themes here, but be able to get (& give

by gojomo 6y ago

Find a lawyer/negotiator with experience in this area you can talk to directly, high-bandwidth. They'll echo many of the themes here, but be able to get (& give) more depth/detail. This is a negotiation that's already started. Any communication about what they are or aren't interested in is a negotiating stance, or opening offer, which may be very far from what's possible if you properly understand your position/needs. Too bad there wasn't a 'shotgun clause' from the beginning. (Then, even if you didn't have cash-on-hand, you could seek other financing/investment to win a fair/orderly divorce process. There are many investors who specialize in SaaS businesses.) Still, insisting on a bilateral agreement that whoever is able to pay more gets to buy the other out might be a reasonable negotiating goal for you, depending on other factors. Your vesting cliff is very important. After the 1 year, there's zero justification for not delivering a full quarter of your shares (~10% of total equity). So I'd see retaining 10% equity (or at the very least 11/12th prorated if you do them the favor of leaving ASAP) as the absolute baseline you should consider. It's unclear if your use of 'they is for gender-neutrality or indicates your co-founder & investor share this desire to get you out. But if the investor is neutral, or swayable, or cares about their reputation for treating technical cofounders, they may be all-important to a fair & amicable resolution. That the co-founder would try this indicates some combination of real difficulties in the working relationship, differences in your perceived values of each other going forward, and/or a willingness to play hardball in grabbing more of a success in contravention of earlier agreements. To the extent it's that last factor, there are other ways you can still be edged-out, via dilution/re-orgs/etc, later on even if you resolved the current negotiation amicably. That's not a reason to run or give up, but something to keep in mind: a seemingly attractive result that's not ironclad could be further reneged. So you might give a little more, with the right protections, so that the result is more aligned/sustainable/enforceable in the future. Good luck!

gojomo 6y ago
Also: if company has 'standard' vesting documents & has taken outside funding, is the lawyer who set those up still a trusted neutral resource for both founders? Even in their role as "company's lawyer", they could talk to you both about how the existing agreements affect the resignation, firing, or mutually-agreed exit of a founder, and discuss ideas that help the company survive & thrive past that event. Though, to actually negotiate (& legally execute) a durable exit agreement, you'd likely want a separate lawyer on your side. (And, given the values implied by the outside investor's price-paid, & your estimation of future revenues, spending a few $thousand here could save $tens-of-thousands or more later.)

by gojomo 6y ago

gojomo 6y ago

Also: if company has 'standard' vesting documents & has taken outside funding, is the lawyer who set those up still a trusted neutral resource for both founders? Even in their role as "company's lawyer", they could talk to you both about how the existing agreements affect the resignation, firing, or mutually-agreed exit of a founder, and discuss ideas that help the company survive & thrive past that event. Though, to actually negotiate (& legally execute) a durable exit agreement, you'd likely want a separate lawyer on your side. (And, given the values implied by the outside investor's price-paid, & your estimation of future revenues, spending a few $thousand here could save $tens-of-thousands or more later.)