Ask HN: I am a Co-founder looking to leave startup before a raise, how to handle

Hi HN, hairy question here from a throwaway.

The TLDR is that a startup I founded a little over a year ago is pivoting into a related idea that I don't want to work on but I believe could be a successful business. I like my cofounder, but I think I am an poor fit for the kinds of work this new idea would entail, I don't love the problem and don't want to work for the people who currently have it. I want to spend my time elsewhere. How do I message this without tanking my former cofounder and the rest of the team as they prepare for a fundraise?

We're early stage and have taken decent "pre seed" money and hired a good team. I was the main contact for investors during our last small fundraising round. My cofounder is looking to raise again for the new idea in January. How can I support them while leaving? On one hand I don't want to leave right as the raise happens as a vote for no-confidence and I'm afraid of the optics. On the other hand, I really do not want to mislead investors by omission and I don't want them to believe I'm bought in and leave immediately after the raise.

More color in case it helps: At my cofounder's urging, I briefly mentioned this to an investor, and it seemed to tank their enthusiasm for investing in the next round. In light of that, my cofounder does not want me to advertise this yet until we figure out the messaging which is why I'm posting under a throwaway instead of asking our other existing investors. They have asked me if I could just stay on on paper and not tell investors or the team for now.

I have 10% vested of the company so far in shares. I have worked for free, raised, and put some of my own money in the very beginning, but I am open to reducing it, because I believe the road ahead for them will be long and uncertain.

I have discussed returning the remaining money from the first round to investors, dissolving the business, and freeing them to start a new one on a clean slate with the different team and different focus, but my cofounder is strongly against that.

IMO this all hinges on if the company has traction with the new direction and pivot. If there is traction, the message to investors becomes clearer and there is motivation to invest regardless of you being around especially if there is a clear story. Both because that investor became unenthused and because you want to leave, I'm guessing there is no traction. In that case, depends on your cofounder's relationship with investors + how much cash is left in the bank. Assuming you raised on SAFE notes, they can't actually force the company to return capital and it's a bad look for them to try. IMO don't worry too much about messaging and just leave, the investors will get over it if traction comes.

However, I would definitely not recommend raising while you're there on paper and leaving right after. This is a pretty material piece of news to leave off of a fundraise, and best case tanks your reputation going forward with investors, at worst is fraudulent and leaves the company (and perhaps you) open to legal action.

It's possible new investors can be enthusiastic, rather than concerned, with the change. A startup without a founder who's not aligned with the new strategy is stronger than one who has someone around "just because" (which can imply an inability to make decisions).

danbmil99's suggestion of touching base with the existing investors is a good one. They could actually help explain this to new prospects.

People who've already met you may not be as enthusiastic about this change as completely new investors, to whom you'll merely be an artifact history, just like the previous strategy.

The key question is if you're critical to the ramp and success of the new businesses.

If the answer is no, then message that to all investors (existing and new): We're pivoting, here's why the new direction is good for the company, and, to make sure we have the right leadership on board, you will transition out and your co-founder will bring in a new leader who is critical to the businesses.

If the answer is yes, think hard about what you want to do. If you love the team and want it to succeed, then gulp it, stay on, raise, help out for a year or so until the business is in motion, and then leave. DO NOT leave a month or quarter after the raise.

If you really don't want to be there, then be honest about that with your co-founder and investors and let them decide the best path. DO NOT lie or hide with investors. It's not only unethical, it could be illegal and they could sue you for misrepresentation.

Companies aside, money is aside, this is a testing time for your personal values as a leader. Decide what they are and stick to them.

It's nice to stay friends with people but at the end of the day you're not a charity. If you aren't being paid and your heart isn't in it just make a plan to leave sooner rather than later.

It'll damage your reputation if you're not open with investors (ie raise then leave) which means you'd have to raise, stick it out another year or so then leave which is all going to cost you in time, money and motivation. But a year down the line they'll be looking to raise again so you'll just keep kicking the can down the road.

Things happen in business. If it's a good idea your co-founder should have no problem finding someone else. If they struggle though, that's not your problem and you don't need to wait for them to do so. Just discuss with them, give notice and ramp down over a month or so as a courtesy.

Your co-founder ought to raise after finding a replacement, with a dedicated team instead of one where an exec wants to leave. Raising now will reflect badly on all of you and reduce your odds of success anyway if your heart isn't in it.

Most startups fail, so I'd prioritise happiness and future investor relations over those with a co-founder tbh. As long as you act professionally (ie give notice you're leaving) that's all anyone can reasonably ask.

This is like pulling a plaster off. Better to be quick and get it over with instead of dragging it out.