
Ask HN: Is it ok to label bootstrapped money as Director's Loan? - notthatone
I&#x27;m a CTO-level technologist. I&#x27;ve co-founded a business with an ex-VP from a unicorn company.  My co-founder wanted to bootstrap the business, we agreed that I take an under-market salary and we split the equity 85&#x2F;15.<p>We are 3 years in. We have grown the team, and we continue to bootstrap. We are preparing for a funding round, and today I&#x27;ve learned that my co-founder has labeled his investment(~$200K) as &quot;director&#x27;s loan&quot; and wants to get the money back.<p>From his view, this is a common practice, and I just fail to see it this way. 
I&#x27;ve treated his investment as the reason we split the equity 85&#x2F;15.  Also, I don&#x27;t think investors are going to be happy that the company has a dept.<p>Is it a common practice label bootstrapped money as &quot;director&#x27;s load&quot; and get them back eventually? If so, should we revisit the cap table with myself getting more equity?
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KZeillmann
Disclaimer: I don't live in Silicon Valley, and I've never worked at a
startup, but this seems really shady/dishonest. First of all, 15% equity
sounds like very little for a co-founder unless you're only putting 15% of the
work in. Second of all, this idea of wanting the "loan" back should have come
up during the equity split discussions. Otherwise, he's essentially lied to
you about the nature of the "investment".

Have a conversation about this with the co-founder right away.

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andymoe
I don't think it's uncommon but it's a bad smell you have not, together,
agreed to this scenario beforehand when they put in the money. Like, in your
operating agreement. You have one of those right..? Usually, there is
something in there about how founders can loan money to the business but
that's worked out ahead of time or when the loan is made.

Founder disagreement is real high on the list of why companies fail and this
is a good test to see if Y'all can hash it out. I also think you all way
overvalued the cash contribution.

