The right way to have handled this would have been to have founder vesting with your co-founder, so that if he checked out (as he seems to have) leaving you to do all the work, you would have stopped the clock on his getting additional stock.
In the absence of that, however, he should still be amenable to a negotiated price, perhaps leaving some upside in play for him. Similarly, your investor should be interested in setting up a favorable dynamic whereby you have enough stock to be incentivized to continue to help the company succeed.
A typical way to do this if the co-founder is unwilling to sell all or part of his stake outright is for the new investor to dilute everyone, and then "re-up" the key players (ie you). You will need voting control of the company you can effect this.
Comments
The right way to have handled this would have been to have founder vesting with your co-founder, so that if he checked out (as he seems to have) leaving you to do all the work, you would have stopped the clock on his getting additional stock.
In the absence of that, however, he should still be amenable to a negotiated price, perhaps leaving some upside in play for him. Similarly, your investor should be interested in setting up a favorable dynamic whereby you have enough stock to be incentivized to continue to help the company succeed.
A typical way to do this if the co-founder is unwilling to sell all or part of his stake outright is for the new investor to dilute everyone, and then "re-up" the key players (ie you). You will need voting control of the company you can effect this.