Comment by vessenes

Comment by vessenes 4 days ago

Some good advice here; couple qs: did you get shares for your personal capital contribution?

Simplest thing to do if you think it will work and don't need money is just sit on your vested shares, perhaps ask for a little more as an exit package, be supportive, offer to join the board as an advisor, and move on.

If you'd like a clean break and some cash, you could call your last round investors and offer them a discount to the last price for your vested shares. Depending on the state of the company and what's next, they may be interested -- there's an implication in these conversations that you'll find SOMEONE to buy eventually, which they may or may not like. I'd guess unless things are gangbusters, you might look at 30-50% discount from the last valuation, knowing nothing about the common, the company or the pref stack.

Another possibility - you could offer to sell your shares at a discount to your cofounder, leaving him in a good spot - he could ask around for a loan / investment (in which case the company would be the buyer, and he'd benefit pro-rata).

Personal advice - keep some, sell some, stay available to help.

tptacek 4 days ago

I agree with Joel Spolsky that nobody should get shares for personal capital contributions (at least, not unless they're investing in a round). If you want to be fastidious, set up IOUs.

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vessenes 3 days ago

I'm 100% the opposite. It's wrong for one group to expect preferred stock for their capital contributions, while they ask the usually less experienced CEO to make a tacit capital contribution (lower than market salary) and then on top to ask them to put cash in that won't be given the same terms -- nah.
Now, if the founder capital went in pre-round, and a round was raised, I'm with you -- that's fine - and between the founders at that point; they got paid in equity valuation. But otherwise; nope.

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- tptacek 3 days ago
  
  We're talking about arrangements between founders, not arrangements between operators and investors. Investors don't ask you to put up cash; that is literally the opposite of what they do.
  
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  vessenes a day ago
  
  Actually they do it all the time - asking to ‘top up’ employee stock option pools before a round is closed, keeping exec salaries low, or cutting them when the company is running low on money - these are all forms of founder capital contribution that are not compensated. I’m not saying they’re not market, or even that they’re a bad idea. But, consider an exec who could make $300k base plus ISOs at a public company going from $170k to $100k for lean times — what would raising that 70k cost the company in stock? A fully level capital stock playing field would see the 70k investment from the founder independently priced in a fair round and deliver preferred stock. I’m unaware of this ever happening in my last 25 years of startup and venture experience.
  
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