Co-Founder Equity Split - co-founder leaving before cliff

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Illustrative scenario prepared by my practice.
For informational purposes only. This is not legal advice. Laws vary by jurisdiction. Consult a qualified attorney for advice specific to your situation.
Hypothetical question

Has anyone dealt with something like this? I'm not sure what my options are.

co-founder leaving before cliff. I've been dealing with this for about 5 weeks now and the situation isn't improving.

I have already tried to resolve this directly but did not get a clear answer.

What are my legal options here? Is it worth pursuing?

Illustrative response

Ngl if you have a properly drafted vesting agreement that he signed, his claim is weak. The whole purpose of a cliff is exactly this scenario. However, he might argue:

  • Pre-incorporation agreement: If there was an earlier verbal or written agreement about equity before the vesting agreement was signed, he may claim the vesting agreement didn't supersede it. Check if your vesting agreement has an "entire agreement" / merger clause.
  • Promissory estoppel: If promises were made before the formal agreement that he relied upon to his detriment.
  • Unjust enrichment: If he contributed IP, code, or other value before the vesting agreement was in place.

These claims are all uphill battles against a clear written agreement, but they're not frivolous enough to get dismissed immediately. Your best defense: the signed vesting agreement with an integration clause. If you have one which sucks, his chances in court are slim — but he may be hoping for a nuisance settlement.

Illustrative response

Have you considered the tax implications of different entity types?

Illustrative response

A business attorney can help structure this properly from the start.

Illustrative response

Thanks for sharing. Dealing with something similar myself.