Comment by siegel | Hacker News Reader

Comment by siegel | Hacker News Reader

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People are right that you would end up being seen as dead weight on the cap table. Not automatically disqualifying to a VC. But not a good thing.

One option we've used in these types of situations: You can enter into an agreement with the company whereby the company is given the option to repurchase your shares (or some portion thereof) in connection with a VC funding round. You can mutually agree on a valuation method (specified fraction of funding round price, 409A price, have a valuation done by an independent accountant). This allows the company to minimize the dead weight on the cap table, while allowing you to obtain some compensation for giving up your shares.

I would not recommend just offering to give up vested shares. What was the point of the vesting schedule you had agreed upon? I assume you've been working without a salary for 16 months, right? What compensation do they think you should get for that?

Happy to provide further advice off this thread, if you have further questions.

Thanks for your reply, I guess my post was confusing because of my poor english.

What I want to do is : I have 33% now and I want that 33% = A% + B% + C%

A% I keep it B% repurchased now C% repurchased later (after funding round for more valuation)

We all 3 agreed on this scenario and I wanted to have the good amount for A, B and C.

We are friends working together so we didn't agreed on a vesting schedule, and we worked without salary, and we each invest 10K to launch it.

I know that A% will be a dead weight, I got other advises saying 10% is too much, I should keep 1/4 of my 33% = 8.25%

So, if my math is correct, if this were a standard 4-year vesting, 1-year cliff scenario, after 16 months you'd be at about 11%.

It would be very generous of you to offer to treat things as if you were on a 4-year vesting/1-year cliff vesting schedule.

If you are comfortable with that, then B% would be 22% (let the company repurchase now). That would leave 11%.

If you are going to offer further generosity, then I'd say this: for every percent you give up to go into category C, then I would transfer an equivalent percentage from B to C.

What I mean is this: Let's say you were going to agree to make A% = 8.25%, as you suggest above. Then that would mean you are giving up 2.75% off the 11%. So, then the breakdown would seem to be: A=8.25%; B=22%, C=2.75%. But then I would move 2.75% from B to C, making the breakdown: A=8.25%, B=19.25%; C=5.5%.

Does that make sense?

There's no right or wrong answer here. But I'm trying to propose something that is defendable on principle, makes some logical sense, gives the company the room it needs to move forward, but also gives you something for your generosity.

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