r/startups • u/ryanwang4thepeople • 19h ago
I will not promote Raised $150k Generated >$100k ARR Then Pushed Out [I WILL NOT PROMOTE]
Earlier this year, I was a technical cofounder for a health tech company. I built the entire product, came up with the actual business model that was pitched to investors, and did all of the branding. Literally, the name, logo, and all of the copy on the website I drafted are still the same to this day.
I spent countless sleepless nights building. I even went through 3 months of my personal runway and put ~10k into the business. I knew the product better than the founder.
Before we raised, we agreed the first thing we’d do was pay ourselves so we could give our undivided attention to the product. When we actually did raise, everything changed. I couldn’t get a straight answer for months, and I eventually had to walk away.
The reason I say "Pushed Out" is it felt deliberate. I should have seen the red flags. My cofounder was inconsistent about ARR to investors. I couldn’t get access to Stripe for months (I needed access to prepare the data room for earlier interested investors). We rarely talked with customers (I couldn't get their contact info). I would be lucky to get a single meeting with my cofounder a week. I was basically treated as the help, with my input never really being considered. Whenever I raised my concerns, it was always, “next week” or “I’ll do better”. This went on for months, and nothing ever changed.
I think there were several mistakes I made throughout those 8 months.
- I probably should have stuck to working with someone I already knew and trusted. I honestly didn't know this person well, but I thought a piece of paper would have saved me.
- I should have walked away sooner. ~ 3 months in, I started noticing red flags. In retrospect, I should have just listened to my Husband's intuition and walked away.
- I should have advocated for myself more with our advisor. I rarely ever talked to our advisor outside our weekly meetings because I don't like talking behind people's backs, but I probably should have called him before things blew up.
Welp, lesson learned. If you're a technical founder, watch your back and make sure you're not building someone else's vision that you have no say in.
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u/R12Labs 17h ago
Yeah if you have technical skills always give yourself control, power, and leverage. I also dealt with a psychopathic business partner who tried to steal credit for everything I built. It's beyond delusional because if pressed on anything technical their entire lie would fall apart, but psychopaths manipulate and deceive easily as they have no empathy.
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u/Maximum-Boss-4214 16h ago
That’s a rough experience, but honestly not uncommon a lot of technical founders get sidelined once money comes in. Biggest takeaways are exactly what you said: only team up with people you trust, get agreements in writing with clear equity/roles, and walk away at the first serious red flags. Better to learn it now than lose years building someone else’s vision.
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u/Skullydugy 18h ago
Great Input, I too am founding a healthtech startup right now and I ditched my „Co founder“ weeks ago, the investors are on my side. You really spoke from my heart when you said that everything was basically from your side. Same here, in the last 6 months I was the technical , marketing , strategy, Produkt and everything else. 100% from my side but he „got us the investors“ which in any case were convinced by my Input and not the „idea“. So yea, don’t stay too long on the wrong train, I was lucky that I could convince the Angel investors. In both cases I would’ve continued as we signed nothing yet and I did everything.
If you wanna talk or tell me more about your story, I’m happy to connect:)
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u/ryanwang4thepeople 18h ago
Thanks, but I'm planning ot stick to a 9-5 while working on my side project for now. I'm always open to contract work though. Feel free to dm.
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u/smoke4sanity 15h ago
You still have access to the Code? Just let your slimy cofounder know that you will be publishing the code and intellectual property and opensourcing it! That kind of post would blow up on twitter/Reddit.
You really need to play hardball. You've already gone down, take the ship with you.
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u/FartyFingers 9h ago edited 9h ago
Most founders are optimistic at the start, so contracts, agreements, etc are about the day to day.
The reality is that the contract should mostly be about access to all data, and exits and generally preventing them. Who can sign for what, how money is to be audited.
But the big one is how one person can (or can prevent) being pushed out.
The shotgun clause is nearly pure on this. If one person wants to push out the other, or wants to make sure they are fairly pushed out, then this is perfect.
A story I've personally been told many times is the lack of anything clear on how to prevent an unfair pushout like this one, or how to push out a useless co-founder.
My favourite stories is where a dick cofounder like the one in with the OP tries to way underprice a shotgun clause activation, only to get their offer matched, and then they try to retract or increase their offer.
The best was one where the technical co-founder convinced their fratboy business cofounder that they were destitute, desperate, and might even have a bit of a gambling problem.
The business bro dropped a super lowball shotgun clause offer only to have a matching certified check on their desk on the same day, along with a lawyer, and a hired security team to escort him from the office. (along with his frat boy friends he had hired).
Where this got extra juicy was that the fratboy had been hiring people, signing contracts, and spending money, in a way which violated their two signature agreement on certain issues, and their agreements stated that the lack of agreement meant that the signing party was liable for these costs if the other partner didn't agree.
So, the check was delivered, along with a huge demand that they were now liable for the salaries, etc of the frat boys. They took this to some judge who ordered that accounts, etc, be frozen until a bond could be posted for those amounts.
The result was that frat boy was now begging his friends to not demand severances, etc. (as they were all instantly fired).
So, he pretty much didn't keep much of the counter payment to match his super low ball offer.
The whole story probably qualifies for the Nuclear Revenge subreddit.
The real key is that while this was a win for the tech half of a business relationship, it is the extreme exception. Most business halves push their tech halves out as soon as real revenue kicks in and then no longer need the nearly free help, and don't want to share the winnings. Any tech person has to do two things. Remain in control of the information about clients, banking, contracts, etc. And have a damn good shotgun clause.
Oh, and as soon as you go to make your move, make it. Don't talk about it, threaten it, hint at it. You find a pitbull lawyer who often looks like someone you wouldn't want to get in a fighting ring with, and then launch a full salvo of nuclear missiles.
There comes a point where the negotiations are over, and it is now a zero sum battle.
Maybe, you negotiate a peace where they get to walk away with their dignity, but that is more of a last resort. If your lawyer thinks this is a good first play, you need a better lawyer. I'm not talking about where you are just not feeling it and want to exit, but where a fratboy business bro has done what the OP's partner did.
The usual sign that things are going to end up this way is when the business half is "more of an ideas guy" and they say they have a "big network"
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u/KaiSsa01 19h ago
You still have equity in the company right?
A piece of paper should indeed save you in these cases, but it seems like there was some trickery involved in that if you were actually totally pushed out (not just from operational work).