How to Move Forward with/without Investor?

Brought on an “angel” investor several months ago, who put in $25k along with two colleagues of mine from another business that also put in $25k. I had already developed the business plan before meeting all of them and have everything packaged, contracts and proprietary software ready to raise the full amount to build our software-enabled clean-tech plant. The $50k was to be used to raise the rest of the funding ($5MM).

After a few months, our cash was getting down to about $20k and no one was willing to write a check, so we pivoted to a smaller plant that we could get up and be going for $750k and tried to raise it from angel investors. Around this time, the angel investor started “helping” a bit more to raise the additional cash and would often get mad when we were working on the same thing, such as sourcing additional investors when we’d end up talking with the same group. Around this time, he also politicized to have him replace me as the CEO.

We pitched a few, I didn’t really do a good enough pitch a one, then he pitched the next one and also failed to deliver. We then pitch to his angel group, who we went through due diligence with and are now doing the term sheets. We have $130k on the table from them and he was going to put in an additional $200k. We also have $150k in F & F.

We then started looking for buildings. Again he’d get all pissed off if he found out I had talked to someone and he talked with them after. He’d also work on cutting me off from all major groups, the angel group, the accountant, etc. When I did find a building where they were willing to cover our upfit cost, he tried to take over that too, but the people didn’t like him; we ended up not getting the deal. So we’re back at building sourcing.

He then called me one day and quit abruptly, apparently because we talked with the same person about a building and he thought it would be too hard to find one. I then continued with the other two members and now have two new people we’re in discussions with for buildings and new investors. I also convinced him to rejoin the company.

He now is even more demanding and controlling and said to come back, he wants me to lower my equity to 45% and give the rest to the other team members. (I’d have initially been left with 60% after this funding round, including a 5% options pool.) The other team members are happy with what they have and don’t need the extra equity.

He is on vacation and will be back next week. Trying to figure out how to get the cash, keep my equity at 60% and have him not be a controlling asshole moving forward.


  • well, a bit of coordination inside the company cannot harm, before contacting third parties. I mean you exchanging infos with this investor. If I were in his shoes, I would get mad, too.

    To lower your equity to 45% means that you would loose the absolute control. But only if almost anyone else is against you, you could be overvoted. If you are several people, noone having absolute control actually makes sense. This way, it is not a one man show anymore. The only question is: what are you getting in exchange for selling (or giving away)15% of the shares ? – Maybe one way out of the situation would be: you keep the 60%, but these 15% get transformed into stocks with 90% less voting rights. So you would end up with 46.5% voting rights, but 60% dividend rights. Again, for reducing your voting rights, you should get at least a symbolic gift.

    • OP Update here: Thank you for the advice. I ended up finding other investors while he was out and a building which sutied our needs, including the capital to retrofit. He then accepted 3% gift to stay with the company, keeping my equity at 66% post-full funding and dilution.

      We then needed a lease garauntee and he offered to provide that for an additional 2%, which would bring his equity to the 20% he wanted.

      The team is happy with my leadership and everything is now set to launch, pending the close and execution of the lease. I offered to give 2% to the investor for his risk profile, and 1% each to the other team members, because they’re using their own company to save us money on construction and putting those profits into the company. This brings my total equity, post launch to 62%.

      Is this a good deal and a proper amount for a founder to end up with, to officially launch a fully funded company; or for my role, would a higher equity be what is fair?


        • I would count this as a home run and just get on with life. You seem to have solved all the problems and made everyone happy. As a founder you are better off than most founding teams. Just listen patiently to input and feedback. Make mindful decisions.

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