Where are you getting the idea that the tech co-founder (TCF) owns "40% of something fairly valuable"? It seems the TCF currently owns 0%, and will go to ~10% (25% of 40%) if they don't get laid off/fired in the next month.
Honestly, if non-technical thought he could fire this guy, he probably would have already. That's why TCF is being bullied into resigning.
What is non-technical going to tell the investors when he fires the guy who keeps everything running, built everything, and did all the SEO?
Think of it this way, take the deal and you get 3% of nothing because it'll get driven into the ground.
Don't take the deal and either you keep working on it, and get 40+% of something decent, or you get N% of nothing because other guy drives it into the ground but you got a better buyout.
There's very little downside for TCF in actually sticking to his guns, and it's not like he's going to look like the asshole here.
It's possible that TCF can hang on until the cliff, but I doubt that'll happen, and it's not going to be pretty if they do. There are all kinds of ways NTF can reduce/destroy TCF's equity; I'd take 3% and move on with my life.
What are those ways? The only sane thing is to go and talk to lawyers. In what world is it going to be the best option to let yourself be used and abused?
Every ongoing business arrangement relies on goodwill and intent to survive, like any other relationship. Consulting a lawyer with expertise in the area may be a good idea, but the best solution is probably the cleanest and easiest one.
Note the “reverse vesting” bit, this caught me out too. This is not the standard employee “you have zero until your 1yr cliff” deal, it’s the opposite in some sense, the founders own their shares unless they leave, in which case they are clawed back, and the clawed back amount goes by the 4yr period.
In this case if the investor has voting rights, neither founder has a controlling share, and the investor is the tiebreaker. So OP can fire the other founder with the investor’s vote.
In any case, this is not going to end nicely, and I would recommend walking away with whatever equity can be had without setting the counter-parties against TCF. If NTF and investor get really mad, they can easily dilute or destroy TCF's equity, so I'd try to avoid that.
IANAL so interested to know how folks with more experience have seen this fact pattern play out.
It's not explicit this was done, so it's assumed it wasn't. If the TCF hasn't spoken to the investor directly, it's relatively easy to assume the investor will vote in the NTF's direction.
Lots of assumptions, but we don't have that much to go on.