The same question comes back over and over: I started a company with someone else. We split 50/50, and now I’m fed up with my co-founder not doing anything. Except he is refusing to leave and barely answers my e-mails.
Have you heard of Vesting?
Vesting is a fancy way to say that you have to earn your shares. You can trust Silicon Valley when it comes to startup deals: we have them all here, crazy successful startups, and also thousands of dead, half-dead and zombies ones too. We are used to both success and failure. So don’t reinvent the wheel unless you are those guys.
A typical deal for a founder is to have their shares vest over a period of four years. So even though you are maybe being promised 30% of the company, what it really means is that you are getting, say 3M shares (out of 10M), but you’ll get to keep them all only if you are still with the company four years later. If you leave anytime before (really, if your other co-founders or investors fire you), then you’ll lose whatever fraction has not vested yet. If you are out after two years, you keep 1.5M shares. If you get kicked out after 1 year, all you have to show for having been a co-founder are 750K shares.
While employees also have vesting, co-founders typically get a better deal. This is a technicality, but an important one to keep your taxes low: you’ll own all the shares upfront, but the company has the right to purchase back the unvested shares.
