Your cofounder left the company but still owns equity, and you're the one shipping, hiring, and taking the dilution. Every round you raise makes their stake smaller and their return larger. This is the most common fight in startup breakups and the one people avoid longest, because the conversation feels like an accusation before you've said a word.
So here's the conversation. What to open with, what they'll say back, and what to do with each answer.
Can you force a cofounder who left to give back equity?
Only if your paperwork already says so. If you signed a restricted stock purchase agreement with a standard four-year vest and the company holds a repurchase right on unvested shares, those shares come back at the original purchase price, usually a fraction of a cent, and you don't need their permission. If the stock is fully vested, or you never papered vesting at all, you have no legal claim. You have a negotiation, and the honest answer to "what if they say no" is that they keep it.
Find out which situation you're in before you open your mouth. Pull the stock purchase agreements, check whether an 83(b) election was filed within the IRS's 30-day window, and confirm what the board actually approved. Noam Wasserman's research in The Founder's Dilemmas found that 73% of founding teams split their equity within a month of founding, usually before anyone knew what the work would look like. That speed is why so many of these agreements are thin.
What to say when you open the conversation
Open with the cap table as a shared fact, not with what they owe you. The version that works sounds like this:
"I want to talk about your shares. Not because I think you did nothing, and not to relitigate the last two years. We're raising in the spring and investors are going to ask why 38% of the company sits with someone who isn't working here. I'd rather we have an answer we both agreed to than one I made up."
That framing does two things. It gives the conversation an external deadline that isn't your resentment, and it makes the problem a shared one. Investors really do ask. A dead cap table is a diligence flag, and a lead investor will often make cleanup a condition of the term sheet, which means you're not the villain, the round is.
Then shut up. Do not fill the silence with a proposal. The first number should come after you've heard how they see their contribution, because if you lead with "I think you should drop to 8%" you've turned it into a haggle before they've had a chance to be generous.
What your cofounder will say back
"I built the foundation. That equity is earned." They're not wrong, and arguing about the value of early work is unwinnable. Agree with the premise and move the frame to time.
"You did. I'm not proposing zero. I'm proposing that the shares match the years you were here and the years you won't be. What feels right to you for the eighteen months you actually worked?"
"I'll stay on as an advisor." This is the most common escape hatch and it's almost always a way to keep the shares without giving anything up. Take it seriously, then make it real.
"Great. Advisors at our stage get 0.25% to 1% on a two-year vest, and they take four calls a quarter and make intros. If you want that, let's write it down with the hours in it. It doesn't replace the founder stake, though. Those are separate questions."
If they go quiet at the mention of hours, you have your answer, and you now both know it.
"I'll sell, but at fair value." Now you're just negotiating price, which is a much better place to be. Fair value for a private, illiquid, non-controlling minority stake is not the preferred share price from your last round. The company's most recent 409A valuation is the defensible number for common stock, and it usually lands well below preferred. Say so plainly.
"Our 409A came in at $1.40 a share in March. Preferred was $4.10, but that's a different security with a liquidation preference. I can do $1.40, and I can do it over eighteen months in three payments because we don't have the cash today."
Nothing. They stop replying. Stalling is a strategy when the other side has nothing to lose by waiting. Attach a real expiry: "This offer is open until we sign the term sheet. After that the price is whatever the board approves, and I won't control it."
What are the four realistic outcomes?
There are four, and one of them is doing nothing on purpose.
- Repurchase at existing vesting terms. You exercise a right you already have on unvested shares. Needs: board consent, a written notice inside the repurchase window (often 90 days from termination, so check the date immediately), and updated cap table records.
- Negotiated buyback. You buy vested shares back at an agreed price. Needs: a stock repurchase agreement, board approval, a stated price and valuation basis, payment schedule with dates, and mutual release of claims.
- Retroactive vesting. Nobody buys anything; you re-paper the existing stake onto a vesting schedule that credits time served and forfeits the rest. Often the easiest yes, because it costs the company no cash. Needs: an amended stock agreement, an acceleration carve-out if there's an acquisition, and a fresh 83(b) if the structure changes.
- Do nothing, in writing. They keep the shares. In exchange you get a signed voting proxy or an agreement to vote with the board, a right of first refusal on any sale, and a clear statement that they hold no other claim on IP, salary, or future grants. A passive holder with no vote is survivable. A passive holder who shows up at the acquisition to negotiate is not.
Whichever path you take, the agreement has to exist as a signed document with numbers and dates in it, not a warm phone call you both remember differently. If you'd rather not draft the terms in an adversarial back-and-forth over email, Servanda gives you a structured place to put the proposal, the counter, and the final terms where both of you can see the same text.
What has to be on paper before you hang up
Share count and percentage, the price per share and the valuation it came from, the payment dates, what happens to their shares in an acquisition, and a line confirming neither of you has further claims against the other. Five things. Anything vaguer than that reopens the moment there's real money on the table.
And say the last part out loud, because people skip it: "If we sell for $200 million, this is the deal we made, and neither of us gets to be angry about it then." Get the yes on that sentence too.
