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I have been working on a fin tech startup part time for the past year and a half and I am feeling like I am getting screwed over. Currently I have 10% of the equity that will be vested over 4 years with a one year cliff. As the technical founder I have built 90% of our MVP and released couple of additional features. The original founder runs the company full time and is in charge of all the biz development including sales and fundraising. He has 65% of the startup equity. We have some potential investors interested and if we get funds he wants me to quit my day job and come work on the startup full time, which I am fine with. My only stipulation was that I will need some sort of salary to pay my bills. I offered to take a significant pay cut to my current salary if I were to move to full time but he refuses to offer me one because he says the investors won’t allow a cofounder to take any type of salary. Personally I don’t think the risk is worth it for the amount of equity I have. He also won’t give me anymore equity if I do move to full time without a salary. He says if I want a salary I will have to give up all my equity and he will hire me as an employee to stay on because he needs me to continue to work on the product. I am not sure if it is him or me being unreasonable about it. And if it is him, I would rather end it here and move on to something else. If it me, I want to get past this so I can stop feeling like I am getting a screwed over.

I believe some of the stuff he has done has been a little shady which is also weighing in on my decision. Even though I have been with the startup I still don’t have any of my equity vested. Around 10 months in, he increased the share pool from 10,000 shares to 10mil shares making my initial shares pretty much worthless (his too). I then had to rebuy back in with a higher evaluation. Prior to launching our MVP, he was constantly talking about all the customers he had lined up but to this day we still don’t have a single customer even though we are currently offering our service for free. He has also been telling investors that I am already working full time on the startup which is a lie. He also refuses to talk about the equity in terms of percentages. His option is that percentage don’t matter and the only thing that matters is the share price (partially true). I do like the guy and he is a 100% committed but part of me is very apprehensive about believing what he says. What do you think?

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    This seems off-topic for the site, you should probably involve your attorney to review the agreements to see if your equity position was improperly diluted, and you certainly shouldn't quit your job to work full time for someone who is asking you to trade in all your equity for a salary. Do the minimum needed to keep your 10% if you believe in the project, find a more lucrative avenue for your free time if you don't think it will go anywhere. Founders can get salaries, most investors won't have issue with a 10% owner getting a salary to go full time (without giving up equity). – Hart CO Aug 7 '19 at 23:15
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    he increased the share pool from 10,000 shares to 10mil shares making my initial shares pretty much worthless (his too). changing the number of shares doesn't change the value of the company... His option is that percentage don’t matter and the only thing that matters is the share price (partially true). Not true. If you own 10% and he owns 65% who owns the other 25%? – quid Aug 7 '19 at 23:45
  • Yes that is true but my original stock agreement was for only for 1500 shares so after the year I have 375 shares vested. When he added those shares I had to sign a new agreement that had a new cliff a year from when I signed that one. If he didn’t change the number of shares I would have 3.75% vested equity of the company vs now I only have 0.00375%. He essentially pushed back my vesting back 10 months. There is another founder with 5% and the other 20% is an option pool for future employees. – FoxyCoFounder12 Aug 8 '19 at 0:21
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    "he refuses to offer me one because he says the investors won’t allow a cofounder to take any type of salary." That's nonsense, and 10% is already low for a cofounder at that stage. He's definitely shady. – Kevin Aug 8 '19 at 0:53
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    "percentage don’t matter and the only thing that matters is the share price (partially true)." Completely false, you can adjust the share price to be almost anything you want with splits or reverse-splits. – Kevin Aug 8 '19 at 0:55

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