My Co-founder is manipulating me to give him my 50% equity in our Startup

I recently started a Salesforce solution company with a co-founder, who has a solid background with Salesforce certifications. I have a background related to Web application development, graphic design, CMS & digital marketing, although I’m also a software engineer. My co-founder was & still is working in a company & drawing a handsome salary while on the other hand, I was & still am struggling with my other company.

I didn’t want to start another company as I was already struggling with my own company — financially & emotionally. But, on his frequent requests & on the condition that we will work 50-50% investment, sharing & profits, I agreed to work with him.

We worked hard, he took care of Dev team management alone while I took care of the company Registration process, Legal documents, Finance management, HR, Marketing & Sales alone. It took all of my hard earn money, my time & I even sold my car for starting this company from ground zero. We even made this company a registered Salesforce consultant last month.

We were going good but there seems to be some mishaps in handling our first client (my co-founder actually made false commitments to others, who were working as developers on our client projects & they backfired by snatching our client eventually) & upon that he fought with me. He asked what my role/duties were and said I was not performing them well. I showed him an excel & analytics reports how we’ve gone from merely hundreds to thousands in visitors & page views on our site. To date, we have 20 niche blogs & branding of two products we developed & we’re even getting some leads from web forms.

I showed & shared with him our complete monthly marketing planner in detail. I created a complete 5 rating scenario budgeting plan for building our marketing & sales team, which he rejected by saying I need to increase our monthly targets of revenues. I explained that I could not as we haven’t even started with our paid marketing & sales, and I lacked the first month statistics for calculation & suggested instead to select a budget that we can move on with our first campaign & see results. Even upon knowing that we have no marketing team & I have to initiate everything while working other roles as well & knowing that we already have paid a hefty sum to sustain our dev team which he was managing, even then I was ok & said we will put in more funds if we have to.

He finally said under these circumstances, we could not run this company & this company will have no future. But instead of saying that we wrap-up this company & bear our losses, he is asking me to give him my 50% of shares. The interesting part is that he is asking me to leave my shares by taking whatever I spent & a penny worth of money as a work fee, and he is refusing to divide assets & whatever bank balance our company have as of today.

I am confused!! I know the company is in the initial stages & demands more work, but I already lost too much. Should I hand over my shares to him or should I look for an investor of my own who can buy may share for some good returns?

 


      • I just talked to lawyer/CA, he said there is a valuation need to be done in order to calculate how much the company have a potential to earn in next 10 years and based upon which I will get my fair share. Just thinking of starting the process.

  • I am Confused… Did you already give him 50% and now he wants another 50% of your shares? (Leaving you with 25% and him with 75%) Or does he want 50% if the total equity? Who raised most of the money to start the company? Can he be replaced with someone better? It sounds like you have a lot of commitments…Do you want to continue this company? Which of your companies has a better chance of succeeding?

    • We induced our own capital as equal, no funding from anyone. I own 50% company shares & he own his 50% share of this company. He is simply asking to leave my 50% to him or to his family members.

      • Why the hell would you do that? Definitely NO. Sell your shares if you can, that’ll be difficult with his guy in a 50/50 equity partnership unless you have a board of directors willing to side with you. Good luck.

  • The Author: He is playing smart, I told him to either wrap-up or to start another company with anyone else with whom he thinks he will have better co-ordination, but due to the simple fact that he know that the initial branding & marketing is done & all the hard work to establish a company from ground by doing dirty work like legal documentation, opening bank accounts, placing proper accounting systems, making strategies etc is already done & he’s aware of that it will take again time, money & efforts to re-establish a new company, that’s why he is making stories that the company will no longer run, but want me to leave my shares of this company to him on a very cheap deal.

    Yes the company made some very good profits in last months, it’s a service based company & the company have a very bright future. As in my area of living, other companies already generating huge revenues & expanded their team/employees from mere 4-5 people to +200.

    The company is started on our equal expenses & we both currently hold 50% shares in this company, that makes him half the owner & makes me half the owner of this company. I refused to give my 50% shares to him or to anyone introduce by him (that is his family members, because i know legally which still makes two directors of the company but speaking of which makes this company completely his own). Instead i want to sell my shares in the open market or to anyone i will introduce.

  • This sounds like Narcissist/Empath modeling. Walk away. Let him purchase your shares. Don’t disparage him. Don’t speak of him. He gets off on screwing people over, then playing the victim, then making you obsessed with how much he is screwing you.

    Take it as lesson learned. You need to understand the basic psychological motivators of someone before you enter into a business partnership (or any partnership). Read up on sociopaths. A quick test is to see how someone treats service staff or reacts to bad news to a stranger. Empathy means a world of difference when you get into a pressure cooker with someone.

    He’s not only paying smart, he’s perhaps playing sociopath. He sees the company is about to start generating money, and that’s why he’s doing this.

    Comply. Get the valuation done if that is customary. Narcissist won’t be able to lose face.

  • Your partner has you pegged as a sucker. He’s trying to rip you off.

    1. Get a valuation by a reputable M&A co.

    2. Get a lawyer.

    Here’s a creative suggestion. Offer to buy him on the same terms. He gives you all his stock (50% ownership) for nothing.

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