We are 2 co-founders - I own 40% and (let’s call him) Jim owns 60%. Jim invested $12.000 (funded the development), I’ve invested about $1.000. Most of the work except of programming (we hired freelancers to develop a sharing economy app) was done by me - I’ve done the initial sketches & app flow based on Jim’s idea, created us a website, got us a payment gateway, communicated with accountants, handled app submissions, marketing & social media, whole design & branding stuff, handled Android programmer, etc. Jim mainly handled the iOS programmer and a lawyer. The overall hours spent (and work done) are maybe in 85:15 ratio.
The app was released a few months ago, got some first users and great feedback from the startup community, but some huge bugs occurred so it’s currently in the stage of fixing them (it’d be done in like 2 weeks)
Now I’ve decided to leave after almost 2 years. I’ve proposed to Jim that my share from the potential sale of the startup will be reduced to 30% immediately and will be gradually reduced ever further over a period of 4 years to 5%.
Jim said that it’s absolutely unacceptable for me to retain ANY equity after I leave. He wants to pay me my share of the incorporation fee that I’ve paid and that’s it. He argues that once I leave the company I’m not entitled to any money he gets from the potential acquisition.
Do you think this is fair? I’ve tried to explain to Jim that what I want is a norm in the startup world and that the equity that I would retain is a compensation for the work that I’ve done to this point, but without any success.
If we don’t agree on my exit (taking my share of the incorporation fee) I think he will create a new company and operate the app like that - the thing is that he paid for the app development with his own money (not the corporate ones) so he argues that he owns the app.
I’d be really glad to hear your opinions & I will share them with Jim too