t_hinman_esq

Hi there! Startup attorney here, so sorry to hear that happened.

First off, it sounds like you absolutely made the right call walking away. You weren't dumb - you were generous, and that generosity was taken advantage of.

To answer your questions:

On protecting yourself legally: Even without money for lawyers, it's a good idea to get something in writing before writing a single line of code. A simple document covering equity split, IP ownership, and expense handling goes a long way. You can find free founder agreement templates online that are better than nothing.

On vetting partners: Look for concrete contributions, not just ideas. Red flags include unwillingness to invest personally (time or money) and vague promises about future value.

On whether everything needs to be "hardcore": No, but clear expectations aren't adversarial - they're professional. You can be friendly AND have proper agreements. In fact, good documentation often prevents relationships from turning sour.

The best partnerships balance contribution and reward. For your current project, don't let this experience make you overly cautious - just be appropriately cautious. Find someone who brings real value and is willing to formalize the relationship early.

Good luck with your new venture!

Hi there! I am an experienced Silicon Valley startup attorney who's been in both big law and in house roles. I also started a couple of companies along the way.

I can't give legal advice over the internet, of course, but happy to take general questions here if anyone wants to reach out!

Equity distribution is a big topic for early-stage startups, and it’s great that you’re thinking about it upfront! Here are a few things to consider as you start building out your plan.

Equity Split

Take a look at what each co-founder and early employee brings to the table. A lot of startups allocate more equity to those taking on bigger responsibilities or risks, so it’s fair and everyone feels aligned with the company’s future. Having these conversations early can go a long way in setting up a strong foundation.

Vesting Schedules

One of the most common setups is a four-year vesting schedule with a one-year cliff. This means each person “earns” their equity gradually over four years rather than receiving it all upfront, with no equity vesting until they hit that one-year mark. It’s a great way to make sure everyone stays committed to the company long-term, and it also gives a bit of a buffer if someone decides to leave early on.

Thinking About Dilution

Dilution is just a natural part of startup growth—especially when you start bringing in outside investors. To manage this, many startups set aside a small percentage (like 10-20%) of equity as an “option pool” for future hires. It’s also helpful to keep the team in the loop about how dilution might affect them down the road as new funding comes in so there are no surprises.

Get the Legal Side Right

Lastly, make sure everything is documented! Having clear founder agreements and shareholder agreements in place helps everyone understand their role, their equity, and how dilution will work. Partnering with a good legal advisor early on can save a lot of headaches as you grow.

I represent early-stage startup companies all the time, so feel free to reach out if I can be of more specific help!

www.hinmanlegal.com

Hi! I am a startup attorney -- of course I can't give you specific legal advice here, but Mindcrime makes some excellent points!

Many states have explicit laws that protect employees from having to assign IP that they have developed on their own time, with their own resources. If you live in CA, CA is a very employee-friendly state and any restriction on competition is generally against public policy.

Without having seen any of your agreements, I would say that if you work on a project on your own time, with your own resources, it is unlikely that will run afoul of your employment restrictions. In addition, staying away from your employer's bread-and-butter revenue streams is also just generally good advice if you're trying not to draw attention or make people angry. ;)

Happy to chat more if that's helpful!

Gosh, that sounds really challenging. I've worked with tons of early stage startups and issues between founders is not unusual -- in a lot of ways it's like a marriage, in all the good and bad ways.

I would suggest sitting down with them and trying to point out some of the issues you've raised above, if you can approach it in a "we're in this together, let's solve this problem" kind of way.

If you can't, is there an investor or a trusted outside party who could help facilitate that conversation?

If you feel like there isn't a productive way to have this conversation, then maybe it's time to figure out whether this is a partnership that can continue and make some difficult choices.

Some of these problems could potentially be solved by outsourcing more of the work you're doing, so you aren't doing all of the jobs, all of the time, but of course, that requires capital, which you may or may not have.

I sympathize, it sounds really difficult right now. Just know these issues are not unique to your situation, and hopefully with some proactive communication you can actually improve the situation for you and for the business.

Happy to chat more if that's helpful!

Wow, I have never seen a non-compete in an NDA, and I have reviewed/drafted thousands. That definitely sounds like red flag territory to me!

Unfortunately, there isn't an exact science to dilution/valuation in most cases, especially in the very early stages. Ultimately you need to sell as much/as little of the company as is required in order to secure the resources you need to be successful. Owning 100% of something that isn't particularly is always going to be worse than owning 1% of a billion dollar company.

That said, there are generally some norms around percentages for co-founders, and employee option grants can be benchmarked against comp data that you can find in Carta or Pave. And managing your cap table on Carta will help to make things easier in the future for investors/employees/the company to manage the cap table as it grows and changes.

Happy to chat more if that would be helpful!

Dilution is a natural part of the growing process of any startup, and typically if you're experiencing dilution it's because you are gaining something in return - cash, in the case of investors, or sweat equity in the case of employees. There isn't an exact science to dilution/valuation in most cases, especially in the very early stages. You need to sell as much/as little of the company as is required in order to secure the resources you need to be successful. Owning 100% of something that isn't particularly is always going to be worse than owning 1% of a billion dollar company.

That said, there are generally some norms around percentages for co-founders, and employee option grants can be benchmarked against comp data that you can find in Carta or Pave.

Happy to chat more if that would be helpful!

Hi! I am a startup attorney - I can't give specific legal advice here, of course, but it's not unusual to be required to sign an NDA before discussing confidential company IP. The NDA basically specifies that the information can only be used for the "business purpose."

You should make sure that it covers the information of both parties (i.e., it's mutual and not one-way), and that the term is long enough to protect your IP (3-5 years might be standard; some large companies want shorter terms to shorten their liability window).

Enforcement would be a suit for damages or, in certain cases, injunctive relief that would allow the disclosing party to bring a claim to a judge asking for an injunction that would force the receiving party to do/stop doing whatever it was that violated the NDA.

Hope that helps!

My suggestion -- if you engage with folks on social media, make sure that the tone and content represents the company, not necessarily you as an individual. The company's social media presence should contribute to go-to-market success. Whether or not you engage with negative comments should always be in that light. Good luck!

This is beyond cool, thank you for sharing!

Startups are difficult, and a 10-year run at any company in the startup space is an eternity! No wonder you feel burned out, especially if you feel the company is not going in a direction that gets you excited to get out of bed in the morning. I never took a sabbatical, but having run my own startup, I'm guessing your team probably feels your energy and won't be surprised if you asked for time off. Why not try something small at first -- 4 weeks, maybe -- and see if you can get some clarity about what you want to do next? Good luck!

Many new startups choose to incorporate in Delaware, US because of its well established corporate law. Institutional US investors will require a Delaware c-corp prior to investment, so if you incorporate elsewhere and then decide you want to raise funds in the States, you will likely need to reincorporate later. Of course there are startups all over the world, but the question is really about access to capital - typically US investors want to invest in DE c-corps. Feel free to reach out if I can be helpful!