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Ask HN: My co-founder fired me, sold the startup, and I haven't gotten anything

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Ask HN: My co-founder fired me, sold the startup, and I haven't gotten anything

#1

Post by sadfounder2023 »

Some relevant details:

- Some of my equity had vested before I was fired, and I have proof of my equity ownership

- I found out from a PR release that the startup was acquired by a PE firm

- We raised $2M in total from a VC. I'm aware that if the startup was sold for less than $2M, all of it would go to liquidation preferences

- I heard through the grapevine that the startup was sold for less than $2M, but I have no idea if this is true, or if there were any shady dealings involved

- I've emailed my co-founder to ask for details but he hasn't replied or informed me of anything

As someone who isn't a multimillionaire, I have no idea what I can practically do to learn more about the acquisition terms, figure out if I'm owed any money, or if I'm getting screwed in any way. Is there anything I can practically do that would be worth the money?

Re: Ask HN: My co-founder fired me, sold the startup, and I haven't gotten anything

#3

Post by mtmail »

7 weeks past since you last posted about the sale (https://news.ycombinator.com/item?id=38059219), have you contacted anybody in the meantime? Can you contact any employees that might have had significant share (received any kind of payout)?

A strong worded letter by a lawyer is probably a good investment. You have shares and demand to know what happened to them.

Re: Ask HN: My co-founder fired me, sold the startup, and I haven't gotten anything

#4

Post by anigbrowl »

Talk. To. An. Attorney.

If you don't know any (which would be weird if you founded a startup) call the State Bar wherever you live and ask them for referrals. You should absolutely not be trying to to open-source the solutions to your private legal problem. You're just setting yourself up for a counter-suit for defamation or suchlike.

Re: Ask HN: My co-founder fired me, sold the startup, and I haven't gotten anything

#5

Post by sadfounder2023 »

mtmail wrote: post #3

7 weeks past since you last posted about the sale ( https://news.ycombinator.com/item?id=38059219 ), have you contacted anybody in the meantime? Can you contact any employees that might have had significant share (received any kind of payout)? A strong worded letter by a lawyer is probably a good investment. You have shares and demand to know what happened to them.

I reached out to my co-founder but haven't heard anything from him.

I also asked around and heard through the grapevine that the startup was sold for less than liquidation preference. But I don't know how reliable this is.

I suppose my main hesitation in hiring a lawyer is that it would cost me a bunch of money, only to find out that the startup was sold for less than liquidation preference. If I did get a lawyer to send a "strongly worded letter", would the company be required to provide details about the acquisition? Given that my co-founder is not being cooperative, I suspect he wouldn't share anything that he isn't legally required to

Re: Ask HN: My co-founder fired me, sold the startup, and I haven't gotten anything

#6

Post by japhyr »

sadfounder2023 wrote: post #5
mtmail wrote: post #3

7 weeks past since you last posted about the sale ( https://news.ycombinator.com/item?id=38059219 ), have you contacted anybody in the meantime? Can you contact any employees that might have had significant share (received any kind of payout)? A strong worded letter by a lawyer is probably a good investment. You have shares and demand to know what happened to them.

I reached out to my co-founder but haven't heard anything from him. I also asked around and heard through the grapevine that the startup was sold for less than liquidation preference. But I don't know how reliable this is. I suppose my main hesitation in hiring a lawyer is that it would cost me a bunch of money, only to find out that the startup was sold for less than liquidation preference. If I did get a lawyer to…

Your last post mentioned a potential 6-figure payout. If that's realistic, then paying a lawyer to craft a communication that requires a response will be a lot more productive than continuing to post here.

A drawn out lawsuit would be expensive, but asking a lawyer how to get clear information about what's going on shouldn't be prohibitively expensive.

Re: Ask HN: My co-founder fired me, sold the startup, and I haven't gotten anything

#8

Post by ipaddr »

Why would he sell for less than 2 million he would get nothing as well. Unless he restructured took preferred shared. But usually it is better to take a chance on a rebound.

A number of things could have happened. If he is not responding a cheap lawyers letter can clear that up. A sale could have some public records depending on who purchased.

How much did you own? 30%?

Re: Ask HN: My co-founder fired me, sold the startup, and I haven't gotten anything

#10

Post by Chandraa »

Don't have a specific answer for you but:

10 person startup. $2M raise. PE firm. Smells a lot like aquihire where existing investors got back some money and that's it.

Note that even if the purchase price was more than $2m, it's possible that investors took all of it. Typically the liquidation preference is 3-5x.

And it the common shares got paid, it's all or nothing AFAIK. I've never heard anything different, but I haven't seen enough.

Regardless, generally speaking, an acquirer - especially a PE firm - would never take any legal risk in a transaction like this.

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