You are acting horribly. You talk about this guy as your "former co-founder" when he is your co-founder. This is a guy who looked out for you when you needed help and chipped in money and effort to support the business in good faith. And not only are you screwing yourself by cheating him, but you are screwing your fellow countrymen. If there is ambiguity in your original agreement work it out in good faith.
If you are running the business and he is doing no work on it right now, it is reasonable for you to pay yourself a respectable salary before sending any profits back. Plenty of companies don't pay dividends. But unless you are eager to shoot yourself in the foot you need to send him an email apologizing for your behavior and putting things right.
You guys can downmod this one too. When it comes to doing business, your word is your bond. This guy made an agreement with someone that he wants to break unilaterally now that he has some money and the agreement is inconvenient for him. This is a simple question of honesty and integrity.
And I would love to hear from those of you downmodding my comments on why exactly you think this guy should get a free ride on the do-unto-others principle. And please post under your real accounts so others have fair warning when they make agreements with you.
Having an agreement is one thing. Threatening to sue and blackmailing with invalid immigration-related claims is quite another. I don't believe the former partner has a case for anything, but if there is any claim, it would be for breach of contract, not theft. Certainly nothing that would land either a conviction or a permanent visa denial. This is a scare tactic, not a pursuit of a claim. It sounds like the two had both committed to work on the company, but only one really did and he now feels used. Obviously we only have one side of the story, but from the available data it seems it was not the OP who broke the original commitment to the company.
Also, how the hell is he screwing his countrymen, as you claim? Are you saying that because someone got screwed by someone in country X, noone will want to do business with other people from country X anymore? That makes no sense.
He is a former co-founder(their co-founded company went under) currently he is an angel investor in this startup. He is asking for 50% of a company on $1000 investment (that is to say an initial evaluation of $2000) for a company that has already turned 4K in profit. The investor has already broken his side of the agreement of 500 a month for 6 months, Why on earth would he expect a full share of the company? He deserves something more than his 1000 back, but it should be closer to a couple of percent ownership. Considering an angel usually gets 10-20% and his early break of contract that would put it at around 3-6% ownership. If he still wants in he should get it, or a new valuation and pay out on that amount of ownership if he doesn't.
I'm not sure why this is being judged bad advice, because this is certainly the path to the least painful solution. If lawyers get involved you're going to burn through any profit you might have had and for what -- to win a moral victory? You need to speak to this person -- face to face ideally, on the phone if not -- and ask what their ideal outcome is. You need to explain, in a reasonable way, what your ideal outcome is. Then you need to talk, and to come to agreement. You might find that he'll settle for 20% of the company and some cash. You might not like it, but that might be a great solution -- 80% of something is better than 100% of nothing. The 80/20 figure is just an example.
When things turn nasty you end up with a zero sum game at best, and quite often you end up lose-lose. You CAN make it win-win again, you just need to detach your emotions and do what's best for you both.
Comments
You are acting horribly. You talk about this guy as your "former co-founder" when he is your co-founder. This is a guy who looked out for you when you needed help and chipped in money and effort to support the business in good faith. And not only are you screwing yourself by cheating him, but you are screwing your fellow countrymen. If there is ambiguity in your original agreement work it out in good faith.
If you are running the business and he is doing no work on it right now, it is reasonable for you to pay yourself a respectable salary before sending any profits back. Plenty of companies don't pay dividends. But unless you are eager to shoot yourself in the foot you need to send him an email apologizing for your behavior and putting things right.
You guys can downmod this one too. When it comes to doing business, your word is your bond. This guy made an agreement with someone that he wants to break unilaterally now that he has some money and the agreement is inconvenient for him. This is a simple question of honesty and integrity.
And I would love to hear from those of you downmodding my comments on why exactly you think this guy should get a free ride on the do-unto-others principle. And please post under your real accounts so others have fair warning when they make agreements with you.
Having an agreement is one thing. Threatening to sue and blackmailing with invalid immigration-related claims is quite another. I don't believe the former partner has a case for anything, but if there is any claim, it would be for breach of contract, not theft. Certainly nothing that would land either a conviction or a permanent visa denial. This is a scare tactic, not a pursuit of a claim. It sounds like the two had both committed to work on the company, but only one really did and he now feels used. Obviously we only have one side of the story, but from the available data it seems it was not the OP who broke the original commitment to the company.
Also, how the hell is he screwing his countrymen, as you claim? Are you saying that because someone got screwed by someone in country X, noone will want to do business with other people from country X anymore? That makes no sense.
"I don't believe the former partner has a case for anything, but if there is any claim".
That's the reason for the threat. He has no other way.
He is a former co-founder(their co-founded company went under) currently he is an angel investor in this startup. He is asking for 50% of a company on $1000 investment (that is to say an initial evaluation of $2000) for a company that has already turned 4K in profit. The investor has already broken his side of the agreement of 500 a month for 6 months, Why on earth would he expect a full share of the company? He deserves something more than his 1000 back, but it should be closer to a couple of percent ownership. Considering an angel usually gets 10-20% and his early break of contract that would put it at around 3-6% ownership. If he still wants in he should get it, or a new valuation and pay out on that amount of ownership if he doesn't.
I'm not sure why this is being judged bad advice, because this is certainly the path to the least painful solution. If lawyers get involved you're going to burn through any profit you might have had and for what -- to win a moral victory? You need to speak to this person -- face to face ideally, on the phone if not -- and ask what their ideal outcome is. You need to explain, in a reasonable way, what your ideal outcome is. Then you need to talk, and to come to agreement. You might find that he'll settle for 20% of the company and some cash. You might not like it, but that might be a great solution -- 80% of something is better than 100% of nothing. The 80/20 figure is just an example.
When things turn nasty you end up with a zero sum game at best, and quite often you end up lose-lose. You CAN make it win-win again, you just need to detach your emotions and do what's best for you both.