
Ask HN: My co-founder refuses to sign a vesting agreement - ask_startup
I and two other co founders recently started a tech company. We received funding from two investors at about a total of 150K. I wanted to enter a four year vesting agreement for our shares in case one of us decides to leave the company.<p>One of my co founders refuses to sign an agreement like this. This makes me worry that he is not committed. What would be my options if, for example, he decides to leave in the next 6 months? I am based in San Francisco by the way. Are there any legal methods for me to force him to sign a vesting agreement?
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davismwfl
Is the company properly formed yet? Did you use an attorney to do it?
Essentially there is an entire process to creating the shares and issuing
them. If he wants to join and have his ownership his option is to sign the
vesting agreement or not join. Not much other than that. You will have to deal
with the potential that he/she says no thanks then and just jumps ship. If
that happens what do they know you don't, is it a major problem? Can they hold
the company hostage to accessing something they built before the company was
created and the technology transfer was completed?

This is best likely answered by an attorney that should be helping you with
some of this, if not find one cause there are a ton of steps to properly form
the company, transfer the IP from individuals and assign the shares etc.

In the end, if one founder has a vesting agreement all should. And just in
general, they are the right thing to do. Make sure this person also
understands liquidation rules and vesting acceleration etc. I found someone I
mentored last year didn't understand how vesting acceleration worked or when
it would happen so they felt the vesting agreement was an investors way to
shaft founders out of their total equity. A little time spent explaining the
reasoning and benefits might help.

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mchannon
Consider from the cofounder's perspective:

Say he does sign the vesting agreement. Things are going well, but you've
taken on more investment, and those investors insist you drop the cofounder
hours before his vesting begins, even though he's been a good contributor.

It's a cheap way to enhance their equity position, and now that the company's
survived to infancy, the cofounder's large looming equity stake is a
liability.

This doesn't always happen, but it does happen sometimes.

Consider a shotgun clause instead of, or in addition to, vesting (strictly for
founders).

Also consider voting structures that disproportionately favor founders, so
that he can't get voted off the island even if he's not financially vested. I
don't know your situation exactly but this sounds like a struggle of control
rather than wealth.

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muzani
What is the reasoning that he gives? I was quite averse to them at first.

Is he looking for a "passive income" gig? He can rest and vest in 4 years.

Is he worried that you can fire him in 3.9 years? Make sure the contract
covers firing that all parties can agree on.

Is he worried everyone else will leave at 4 years? 4 years is a good
"reassessment" period. If some people want to continue and some don't, they
can sell their shares to the others.

Is he worried he can't commit? Vesting is perfect for that! Get paid scaled
accordingly with commitment. No social guilt if another opportunity comes up
or if the startup isn't making enough to feed the kids. Similarly, you don't
have to be so worried about his commitment if he signs.

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RtBVCFO
Exactly.

Understanding WHY he doesn't want to sign gives the direction to solve it.
I've had clients being resistent on them as well, but addressing the why
helped resolve. Usually there is a fear behind it - getting screwed, getting
fired, fear of losing control of their baby etc.

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deepstream
> Are there any legal methods for me to force him to sign a vesting agreement?

This seems like a red flag for any relationship. If your attitude to your cf
upon disagreement is to find a way to force him, it doesn't sound like a
partnership. more like someone you don't want to work with. if that's the
case, maybe better to face it and find a way to part ways.

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rajacombinator
Send him some blog posts about why vesting for founders is fair - a lot of
newbs don’t understand this. If he still refuses, figure out a way to drop him
ASAP.

