Ask HN: Investors who also are co-founders, how did you deal with equity?

5 points by melonbar 5 years ago | 4 comments

I am currently involved with a company that brought me on as an angel investor but I also have co-founder status (I am technical and worked with the CEO to help crank out our MVP, which even started generating revenue which is neat). And have about 1/3 of the equity in the cap table. They are very fair and the other two founders are great. We are trying to go by the book and I’m just curious how it would work with cliffs and vesting if I have provided material support in the form of cash infusions while also working directly. I have been involved long before VCs got interested and feel it fair that I don’t have as much of a cliff and a shorter vesting schedule considering I provided plenty of moolah. But I also want to stay and help them grow as best I can. That said I don’t want to do anything to upset upcoming VC meetings. Any suggestions or anecdotes from others with more experience would be fantastic. Thanks a ton, and happy almost Turkey Day :)

dnh44 5 years ago |

The point of vesting is to exchange shares for value as the value in the form of work is provided over a period of time.

If some of the value you provided was in the form of cash then the corresponding shares should be yours the moment you transferred the money.

Please note that I’ve not actually implemented this myself. In my company we just split all the shares evenly on day one with no vesting schedule.

It’s been kind of interesting because no one has any real authority over the others and the few major disagreements we’ve had were solved by whoever was quickest in performing a fait accompli. This has resulted in occasional shouting and aggressive behaviour.

melonbar 5 years ago | |

Thanks a ton for the reply and apologies on the late one on my part. I zonked out right after. I can see that but I do think appreciate the answer as it clears some up for me. Cheers!

wmf 5 years ago |

I have no firsthand experience with this, but what if your founder equity has vesting but your angel equity doesn't? Track it as if you're two people.

melonbar 5 years ago | |

This is great and I talked to the other founders today and this is about what we are going to do. My wife is actually a partner as well, she is a chemical engineer helping with the hard science I am just a coder, but we may create an LLC to hold the shares with no cliff that we got at par price and then the rest will vest (like 75%) just to ensure investors aren’t spooked by a shareholder having so many unvested shares in a nascent but growing company. Thank you for the response!