Ask HN: Leaving as founder, what happens with equity?

Let's say you had 2 co-founders and you all vested 33/33/33. I would personally feel unethical about keeping the equity if I left after 6 months. At that point, you're now free-riding on the remaining co-founder FUTURE work. Furthermore, you keeping that much equity will screwing the company (and yourself) since it will limit ability to raise money, bring on key executives, open up an option pool. In this case, I'd return a good chunk (but not all) of the equity.

BUT if the equity vested was really for PAST work, as you imply here, then yeah, keep the equity.

"the other founders are asking me to return some/most/all of the equity that was vested up front."

Don't do this. Most likely this will be used to redistribute this share to themselves or the option pool. They WANT this potential share for themselves if the company is successful, and it's not in your interest to give it up.

You've started things, most likely, and if things were standard-ish, you might have been vesting your stock at 1/48 (or maybe 1/36 or something?) of the total each month (founder shares may also not sometimes not require a year's service to vest). You legally earned what you got during the 1/48 and have no obligation to return anything. The pre-vested up front stuff might have also been sizeable, and most likely will be a foundation for future work that this business produces.

The downside is your last comment about "may start a new company", which seems like they might not be above board. In this case you may need a lawyer, but it might not hurt to contact the board if you have investors on it. If there's no investment, you might have a harder position and you may (I am not a lawyer) need to watch them to see if any of those entities exit. In other words, you might have to sue to get what you are owed for the stock games. Most likely this is an empty threat, and you should probably indicate you are aware of your legal options and reserve the right to exercise them if this happens.

I don't have a great understanding of what happened there, but think about Facebook and what it has done with screwing initial employees from time to time, and they seem to have won at least in part.

Given, if the startup is already crippled due to not being able to work together, the chance of success at the end is reduced. Don't give up your shares - but don't count on them being a thing either.

They should be happy that you still have your shares because you have an interest in seeing them still be successful and are not ALSO going to form a company in the same space. Perhaps. Depends what your exit agreements were, if any. And you should be careful what you sign there as well.

But yeah, sounds like they are asking for things that are not in your interest.

That said, you presently own vested shares in the company, and that means you [likely] have minority shareholder rights. If the company does not act in your best interests as a shareholder, then you have cause for a lawsuit. So, they can't play games with your shares without opening themselves up to a lawsuit.

However, you're bailing after only six months, which implies that you believe you'll be able to create more value for yourself by doing something else rather than seeing it through with a startup. It also means that the company must create all the value while you sit back and pursue something else; there was prior work done, but how does that compare to the work that needs to be done to make your shares worth something? Your shares are essentially deadweight that disincentives the remaining teams (and investors).

A typical shareholder's agreement will specify that the company and/or other shareholders will buy back your shares for the present valuation. It is also pretty typical for such a shareholder's agreement to specify a "method valuation", like a penny/share, in case you have not yet taken outside investment.

If you do not have a shareholder's agreement that covers this scenario and you have not yet taken VC and the company still has a substantial way to go (all of which seems like your scenario, since you're asking on HN rather than acting in accordance with a contract), then the honorable thing to do is sell your shares back to the company for a token amount. You're getting off the bus; in exchange, you don't have to ride the bus, and that's worth a great deal to you.