Hi Reddit, I’m a co-founder of a startup and I’m preparing to transition my level of involvement (currently full time moving or freelance) in my startup since there isn’t enough work for me to do in the areas that I want to work in (creative & product design). This has led to frustrations from both sides and me and my co-founders agree this is the best decision for the company to move forward.

We’re not in the period of figuring out how to structure this transition and one of the most difficult things to decide upon is what to do with the equity. Some background on equity distribution: We founded the company with 2 in beginning of 2020 and found a third co-founder late 2022. We split equity equally. Over time we’ve raised multiple times (but only with safes). Now after almost 4 years of work, I’m going to step back to work on a freelance basis. I’m wondering how much equity I should give back to the company. I obviously want to keep some, but also don’t want to hinder the further growth and success (we’re planning to do a big prized round in 2024).

I’m looking for other founders that have gone through something similar to ask for advice–either left themselves, or had someone leave, or step back a bit. Do you know of anyone that has gone through this, or has experienced something similar? Please let me know, would love to hear your thought on this!

  • Defiant-Traffic5801@alien.topBEnglish
    1·
    1 year ago

    If you’re ready to give away shares in the company, they should be available to be shared equally between all other shareholders (shareholders agreement probably takes care of that anyways)

    These shareholder agreements also often have a leaver provision that gives rights to the company or other remaining shareholders to buy back shares from a key executive leaving who had access to equity under preferential terms.

    In your case if nothing of the sort is written yet, maybe you can agree with other shareholders a fair value (per share) for the company today and give other shareholders a call option on part of your shares at that strike price. This way you retain full upside on a fair amount of shares and the company / other shareholders have access to further upside on the rest. In one of of my companies we consider this pool of shares quasi treasury stock that can be allocated at a later stage to key executives.

  • nartiny88@alien.topBEnglish
    1·
    1 year ago

    So, from the perspective of ‘best practices’, I’m aware of two relevant points. 1. As others have said, have the shares vested? 2. Are you departing as a “good leaver” or a “bad leaver” - these are terms that get used in founders agreements.

    Without more detail, it’s hard to do more than guess, but sounds like it wouldn’t be totally unreasonable to expect to have your shares bought out.