Ask HN: Co-founder wants me to leave but won't entertain a buy out offer

I'm the technical co-founder of a pre-revenue startup. We were 51/49% to them and took a small round of pre-seed funding (~$100k) so our cap table is approx 40% for me and co-founder, 10% option pool and 10% investor. We have very standard shareholder agreements for 4yr reverse vesting with 1yr cliff.

My (non-technical) co-founder spent $10k to create the initial website over a year ago with the idea. I joined about 11 months ago and since then the idea has changed a bit, we've built loads of products, grown from 2k users to 60k users and continuing to grow due to dominating SEO for our niche.

Recently my co-founder said they wanted to work on it themselves. I said I didn't want to leave. They suggested I go down to 3% equity and they continue. I said they would need to buy out my equity at a fair price.

My co-founder doesn't have the money, and the business only has around $40k cash in the bank right now. My co-founder also won't entertain the idea of raising external money to buy me out, or monetizing the site right now.

To me this seems ridiculous as I'm literally just giving away my equity after spending 11 months building the tech and growing the business. Right now if we stuck adsense on the site, we'd generate $5k/mo, and we have inbound sales leads looking to spend upwards of $40k with us. Basically, the business is primed to make money.

They will not entertain the idea of me buying them out for cash.

What are my options here? It's basically being presented to me as "Take the 3% otherwise you'll own 40% of nothing". I don't really want any equity in the company at this point if I'm not involved.

The seed investor is remaining neutral.

It's not so much that they'll torch the company. They're just saying they don't have the cash so need to reduce my stake. They will budge on the 3% I'm sure, but I don't value the equity much if I'm not involved.

I'm not too sure what a lawyer would recommend at this point? I also can't really afford one personally - especially as I may be out of work soon haha..

keep 40% of nothing. do not capitulate. you have the upper hand here, and an honorable position.

3% of nothing is nothing also. i’d go with 40%.

it’s absolutely ridiculous because the other founder isn’t prevented from working alone because you hold 40%. the 2 things aren’t connected. so just agree to sell all your shares in the next raise. then it’s his choice: take on debt now to buy you out (cheap) or pay later (expensive). the latter is likely far, far too expensive so more likely you can only sell half your stake in the next round.

EDIT: it has occured to me that you are only 11 months vested. this is a bait and switch. make their lives hell, even after and if you get to keep 10%. he probably can't fire you so you'll just keep vesting. make it very clear you will make it impossible to fundraise unless he buys you out.

Talk to a lawyer.

Seriously? If you are asking these questions, your understanding of the binding contracts belies the casual verbiage in your post. So which one is it?