What happens if your co-founder leaves Your Startup?

It’s also a good idea to create a founder IP agreement that includes terms that clearly define what happens if your co-founder leaves your startup. This is mainly to prevent a situation in which your co-founder leaves and is in possession of your company’s creations, opening the door to potential competition.

Should you pay co-founders for startup capital?

Instead, assign equity compensation based on the relative value and volume of the work provided by each founder. A co-founder whose most significant contribution is startup capital should probably be an investor, not a team member. If a co-founder does want to contribute, just pay them back when you close your first funding round.

How to deal with a co-founder who wants to exit?

There are certain measures you can take early on to help make a co-founder exit situation easier to deal with. Creating a Founder Accord that details founders’ roles and responsibilities is a good way to help prevent future disagreement. You should also make sure to have a shareholder agreement that includes vesting provisions for founder shares.

Can I fire my co-founder?

You most certainly can fire your co-founder. Especially since you’re doing most, if not all of the work! However, you can also make a healthy compromise that doesn’t result in burned bridges you may want to also consider. Considering that the operational funding is coming mostly from this individual it may even be the sensible thing to do.

How to deal with a partner who owns 40\% of a company?

You need a better solution. Either work something out with him or ask him to find an investor to buy out his 40\% – or shut down and walk away with whatever you would get – if anything. Surely it depends on the amounts your speaking of.