Dear HN,

A friend of mine came to me with a business idea and wanted me to join him as a technical co-founder. I wasn’t sure I wanted to commit to that but offered to help him build a prototype so he could raise some money and start a company. I told him I might potentially consider joining the company later, but gave no binding promise.

He didn’t have any money at the time to pay me for working on the prototype so we came up with a deal where I would charge my normal hourly consulting rate, but if he hadn’t managed to incorporate and raise money after 3 months, then he wouldn’t have to pay me anything. But all the IP would revert to me and I would essentially own everything.

At the time I considered the deal to be fair and pretty low risk for both of us. He claimed to already have investors interested in his idea and I didn’t have any other consulting gig at the moment anyway. I also wanted to help him out starting his company. If he managed to raise some money, which seemed likely, it would be a fairly good payout for me at the end of the 3 months.

I worked hard and built the prototype for him. I probably worked harder than needed, but I wanted him to succeed. At the end of the 3 months he claimed that he was on the verge of signing an investment with several angels. But he needed me as a co-founder to close the deal. I told him I would consider it if we split ownership 50/50. Seemed fair, since I basically had built the product all on my own and he had contributed almost nothing, beside the original idea. But he refused to give me anything above 20%, which was a big red flag for me. So the deal with the investor never happened and ownership of all the IP defaulted to me… or so I thought.

I obviously dropped the project and went on working on other things. But the other day I read a news article about how my “friend” had just raised a large sum of money from several prominent investors and had been running his company for more than a year with IP that I was the legal owner of. I was shocked by the audacity and emailed the guy telling him that he could please pay me what he owed me, and I would not pursue any legal action. But haven’t gotten any response. crickets

So what should I do? The amount he owes me is quite a considerable sum for me, but not unreasonable. I have a contract that we both signed listing everything in detail. So shouldn’t be any problem to prove. I never gave him the code I wrote for the product, but a lot of the work was on architecture and product design that I did share with him, so I don’t think it should matter. He is still using my IP.

Contacting a lawyer seems like an obvious next step. But that costs a lot of money. I am considering emailing his investors as a next step. But don’t want to screw things up for him. Just want to get payed. He will need to raise a seed round at some point, which would be impossible unless he lies to his investors.

Any suggestions on what I should do?