Cofounder considering leaving after Series B - looking for advice *I Will not promote*

If you don't want to be unemployed, before leaving this startup, have you thought about delegating and stepping back? I'm a founder and VC-backed. But I stopped showing up during GP meetings and angel meetings. I let my team do this; I hate meetings, GPs, etc. And I automated as much as I could, because the job market is insane now. I think you'd rather stay in your startup.

That's a pretty interesting approach, just fading into the background like that. How did your cofounders handle you stepping back from the meetings, did they push back at all or were they cool with it

Some people just prefer IC work. I’ve noticed it with SWEs a few times where they get a professional management team in place and then they’re free to kinda do what they want.

I like coming up with strategies, having informal meetings with investors in person, making the first contact, handling PR, travelling, and speaking on panels. But I don't like pitching, closing funds with GPs, and then I just exit, and after the team finishes the meetings, I step into paperwork, admin, etc. The team are ok; they absolutely love this. Cofunder B: GTM; cofunder C: board member, investor relationships.

My side business that does traditional offshoring with a twist: in-house emails/part of the team + AI acceleration is doing really well. Growing faster than my main startup for now. Lots of bureaucratic, glacially slow offshore teams are prime for disruption. They’re not agile nor do they know how to use AI properly to streamline the development loop. Point being, if you’re either in the business of selling the jockey or the horse for the AI race you’re doing pretty well. If you’re spectating or still in the bicycle race then yes it’s hard. Half the battle is how you pitch your skills.

Thanks for the response! I don't want to continue in the firm partly because role and responsibility boundaries are not respected. So, despite bringing on a team(s) that should have taken responsibility off my plate it has only continued to grow.

That's an organizational systems engineering design problem. You redesign incentives, communication boundaries/channels, ownership structures, etc to solve that type of problem. Project Management can be a tool to migrate culture towards your intended healthier design, but ultimately the org design is what matters. Can take a few iterations.

If you’re a founder of a post-B company that’s doing pretty well (I.e raised in the last year or so) then the equity is likely worth a significant amount of money on paper. You should definitely get advice from both lawyers and accountants before doing anything. I don’t have specific recommendations but you probably can’t go wrong with the big ones like Godwin and KPMG or whatever

Thanks! I have reached out to a few but in the last half decade at the start-up I have noticed a staggering difference between good and not-good counsel. Hence the request for specific names and got a few now from some VC contacts.

Couple of things dont really compute to me. Why aren't you on the board? Surely as a cofounder you're a significant shareholder so should have a seat on the board? And how is your notice period only 4 weeks? Though this might be a US thing. Anyway recommended not doing the option of finding another job and handing in the minimum notice. Speak to your cofounder (s) first and then board about the plan to transition out. As a cofounder you want the process as smooth as possible. And it's in your interests as a shareholder for it to be a success after you leave. This is all assuming your relationship with your cofounder and investors hasn't already broken down. Getting a lawyer absolutely if your relationship has broken down, but would say unnecessary if not. But that's assuming you are aware of the general exit provisions from when you signed the contracts. Now it's too late tbh. Aside: am speaking as someone who's cofounder left. And who also left later (though that was post sale). In both cases it was a slow process.

I am only on the board of startups I personally found. I just prefer staying on the build side. If I’m a co-founder I reject the board position unless it necessary in which case I sign over voting rights

For the board seat - when we raised our B we went from a founder majority to an investor majority which reduced our founder seats. I was the founder who didn't retain a board seat. That in and of itself is not a problem of the 3 founders I would have also picked the other 2 to be those with the seats. Things have not broken down with the non-founder board members, board observers, or the cofounders. I am wrestling with the notice period which is what I am seeing feedback on. Now that I have talked to more parties it seems like the path I should go is let the board/founders know and offer a 3-4 month window with support on comms/transition in trade for a bucket of things.

Reach out to Brian Alford at Optimal Counsel. Startup lawyers. They are in Austin but you likely don’t need California-barred counsel unless you litigate. Brian is smart, former big law and now runs a firm with other former big law colleagues but at a much better rate.

Thank you for the recommendation!

You’re welcome! I should have mentioned I am a lawyer and that’s who I use. They only represent founders and startups, no investors. And Brian comes up with very creative solutions.

Brian Alford

Lol. Holy shit. Never thought I'd see that name here.

Speak with both a lawyer and an accountant, although my sense is your situation is likely fairly straightforward for them. 4 weeks' notice seems fine if not quite short. Often times senior folks will move to an advisor role and continue to vest some equity with some minimal involvement with the company to ensure the transition is seamless.

Thanks - after talking to a number of founders/VCs it looks like I am going to be giving a 3-4 month window and support for comms/transition in exchange for some items that I want.

As others have said, renegotiate your role and be realistic about your new worth.

Just put your legal docs into an LLM and ask it, you don't really need a lawyer or accountant, it's not that complicated. You could also just read the docs yourself, it's really not that hard. In general, I would probably just talk to your cofounders about a transition? Unless your relationships with them are just broken, they're not going to just push you out because you said you're going to leave. You can start by handing over responsibilities and helping people transition and start focusing more on shorter term IC work, etc. You can frame it as a transition to IC work for everyone you don't want to tell.

This is terrible advice. Don't do this shit with what is very likely $5-10M of equity on paper. You should absolutely read the docs but you have no idea what case law or precedent is if this gets ugly and gets litigated. That's why lawyers exist.

It's truly not that complicated when you're leaving of your own accord. If you were being pushed out or they were trying to dilute you out later that would be a different thing, but leaving is going to be pretty straight forward.

Are you in the US? Why didn’t you early exercise your options when they were granted?

My initial grants are all exercised. It is grants that were added at future funding rounds that have not been exersized because they would have been a significant tax hit, which is still the case now. One of the things I will seek in the transition is a 10 year expiration.

If company is growing and stable, nobody wants to rock the boat by pushing out the founder which can hurt the company. This gives you leverage on your existing. I would negotiate 6-1 year where you would keep base compensation and benefits and exercise options or sell back shares depending on circumstances. In that time , you will have a nominal title but in reality you will just be consulted as needer. You will keep low profile until you land another gig do something else

Thanks! Talking with some VC friends I basically got similar advice. I have leverage here just need to make sure things are not presented as some atomic option and a 3-4 month transition window should be offered.

20 year San Francisco VC here - you 100% want to get a lawyer. if you shoot me a DM with an email address I can intro you to good SF startup layers a Goodwin, Fenwick, or Sidley for this.

This is heavily dependent on the agreements you signed. My law firm has handled some exits that were messy and some, not so messy, and it all depends on your agreements.

I'm a founder and went to law school, fwiw. Your order of operations, IMO, are: 1. Consult an attorney - I'd ask AI first because honestly, a lot of these contracts are boilerplate and it'll give you 99% of what you need, but it's always worth an attorney. Any corporate lawyer will do this - if you want the best of the best, find lawyers at Vault 100 law firms like Quinn Emmnauel, Latham, Skadden, etc. Unless this is likely to result in serious litigation, any lawyer charging over $500/hr will give you the same value I'm guessing. Any lawyer doing exec. comp. will also work I'm guessing. 1b. I'd start quietly looking for something after you know the lay of the land from number 1. YOu don't want to tell them you've found something else even if you have, but you want to have it. 2. The worst thing you can do is really piss everyone off and leave them with a bad taste in their mouth. These contracts are written in ways that if they want to make your life hard, they can. So give them ample notice, make it a smooth and pleasant transition, be apologetic for the inconvenience even if that's not how you feel. 3. Give them a few months, say you'll help find and train the replacement. Depending on the nature of your equity, you can negotiate around that (e.g., I'm happy to consult for X period of time, if I can vest Y% of my time-vesting units). Hope that helps.

Any of the major Silicon Valley law firms should be able to help you navigate this—Wilson Sonsini, Fenwick, etc. If you've already exercised your stock options, those shares are yours, subject to any remaining vesting or repurchase provisions. If you have unexercised ISOs, you'll generally need to exercise them within 90 days of leaving employment to preserve ISO tax treatment, or negotiate an extended exercise window, which typically means converting them to NSOs. That's one of the easier concessions to negotiate when leaving on good terms. If you're a C-suite executive, you should plan on providing more notice and a longer transition than you would as an individual contributor or middle manager. A couple of months isn't unreasonable, unless you've already been gradually extricating yourself from critical functions. It's also not uncommon to retain a limited advisory or consulting role, particularly if you're a key holder for things like certificates, critical accounts, or institutional knowledge. You might negotiate continued vesting at a substantially reduced rate in exchange for remaining available to the company. This can preserve vesting continuity, although consulting alone generally won't preserve ISO treatment beyond 90 days after employment ends. These are just some of the considerations. More importantly, I'd have a heart-to-heart with your co-founder before getting too far down the path of an exit, especially if you're instrumental to fundraising or maintaining investor relationships. How you handle the departure can have a significant impact on both the company and your own economic outcome.

You say you're still in several critical company functions and that the company can keep operating without you. Those two things can't both be true, or the functions weren't critical. And you're off the board since the Series B, so who exactly are you planning this multi-month transition with?

Reddit is not qualified to help you with this. This is worth paying an expensive attorney to help with.

removed from your own board at series b and you're crowdsourcing CA law firms on reddit. you can afford a lawyer, you just like the attention.

Definitely hire your own independent startup attorney rather than relying on company counsel, because company lawyers represent the entity and board interests, not yours. Look into boutique firms that handle executive equity compensation and founder separations in California. On timing, giving a four-week surprise notice after Series B often triggers bad blood with investors and cofounders. A staged 2 to 3 month transition with clear knowledge transfer milestones protects your reputation and makes secondary stock sales much smoother later.