3 ms·

Well, there were several corporate machinations. Initially, the company was an LLC, and I was given a 20% interest in it in writing. At some point after I lef

Well, there were several corporate machinations. Initially, the company was an LLC, and I was given a 20% interest in it in writing. At some point after I left, during one of the financing rounds, it became a corporation. The corporation was sold.

jpdoctor 15y ago
> At some point after I left, during one of the financing rounds, it became a corporation. The corporation was sold. At what happened to your shares at that point? If I'm reading between the lines of your lawyer, your shares were wiped out at the time of sale? I've heard of this happening often (dilution of the common happens frequently before an IPO, for example. You can see it in the S-1s.)
- davidw 15y ago
  Sounds like they haven't really communicated anything to him about what happened after he left, which means that that would be the place where HN leaves off and a lawyer takes over.
- saalweachter 15y ago
  As someone who is not a lawyer, I feel like investigating what happened to that original company is the best angle to work. Your legal rights stem from the LLC; whatever you are entitled to will depend on the exact fate of that company.
winterchil 15y ago
Sounds like the transition to the corp is the root of the problem. Realistically there are very few restrictions on how to do this and it's SOP for non-contributing minority owners to get seriously diluted. Harsh but fair: this is as it should be. Ownership based on work/effort/invention rather than invested capital is contingent on that work continuing for a LONG period. Generally these arrangements have a cliff also - so if you leave in less than 12 months your ownership is drumrole nothing. This isn't true only with startups - look at inventors in other businesses... in exchange for an idea and sample they get 1% of the royalties, it's small because sales & marketing & production are more important than the invention It's entirely possible you have a case, but your description sounds like the prototypical ex-founder nightmare. Based on pattern-matching, you may get some cash, but nowhere near what you're saying you're entitled to have. There's a risk though, if you have any entrepreneurial aspirations you'll burn all your future potential with the lawsuit. VCs and potential co-founders will be very wary of dealing with someone who has taken this route.

jpdoctor 15y ago

> At some point after I left, during one of the financing rounds, it became a corporation. The corporation was sold. At what happened to your shares at that point? If I'm reading between the lines of your lawyer, your shares were wiped out at the time of sale? I've heard of this happening often (dilution of the common happens frequently before an IPO, for example. You can see it in the S-1s.)

davidw 15y ago
Sounds like they haven't really communicated anything to him about what happened after he left, which means that that would be the place where HN leaves off and a lawyer takes over.
saalweachter 15y ago
As someone who is not a lawyer, I feel like investigating what happened to that original company is the best angle to work. Your legal rights stem from the LLC; whatever you are entitled to will depend on the exact fate of that company.

winterchil 15y ago

Sounds like the transition to the corp is the root of the problem. Realistically there are very few restrictions on how to do this and it's SOP for non-contributing minority owners to get seriously diluted. Harsh but fair: this is as it should be. Ownership based on work/effort/invention rather than invested capital is contingent on that work continuing for a LONG period. Generally these arrangements have a cliff also - so if you leave in less than 12 months your ownership is drumrole nothing. This isn't true only with startups - look at inventors in other businesses... in exchange for an idea and sample they get 1% of the royalties, it's small because sales & marketing & production are more important than the invention It's entirely possible you have a case, but your description sounds like the prototypical ex-founder nightmare. Based on pattern-matching, you may get some cash, but nowhere near what you're saying you're entitled to have. There's a risk though, if you have any entrepreneurial aspirations you'll burn all your future potential with the lawsuit. VCs and potential co-founders will be very wary of dealing with someone who has taken this route.