How should you compensate a resigning co-founder that has done strong pre-launch work?

  • Equity or a cash payout (or royalty, I guess). A combination of what was decided at the beginning and what everyone feels is reasonable now. These things are fluid.

    • Original poster – yea the shares are vested with a 1-year cliff, but we haven’t passed that year yet.

      Looking to convert them into an Advisory role, but I’m not sure what would be an appropriate % or cash/royalty payout.

      Thanks for the help

  • That’s why it’s a bad idea to accept cliffs if not getting compensated elsewhere.

    If you want to do the right thing then just make a board resolution to not buy back the stock and let it vest normally.

  • I faced this myself – having an “amicable divorce” with my original co-founder. We settled with me keeping 95% and him getting 5%. This made sense since the company wasn’t yet (and still isn’t launched and/or profitable). His participation assisted in wireframing the original product and helping convert everything from a general idea/concept into an actual business.

    We didn’t fuss around with a vesting schedule. I didn’t want to pay him outright given the company’s current position (not yet making $). He and I both figure he helped get us well down the path but that execution would be 95% of the work and so the proposed split felt fair to both of us.

    Hope that helps.

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