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!
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.