Finance · Financial analysis

Do my cofounders want to buy me out?


Last updated on April 5th, 2018

Following situation:

I started to work on the business in May 2015 with partner E that approached me.

Today after 3 years there are 5 partners and a company has been set up by partner B in India. The product is a mobile app.

Shares: 40.000

Relative distribution:

A (Me): 28%

B 25%

C 20%

D 17%

E 10%

The people are all in different places and working remote via Skype. Person A (me) had a lot of trouble with person E and sweared to him over a long period of time. Stopped in November 2017. Person E and D ignore Person A completely. Person A (me) has built up the team (is the only person which met every partner in real life), made immense contribution over the course of 3 years. The 3,000€ money of a 6th partner who is supposed to get 1% is used up. The business has no money anymore and no investor is there (if its true what has been told to me by Person B). Further development of the app can't be paid. No mobile app developer is in the team.

The business has potential in my eyes but only because of a partnership that I initiated with the largest youtubers of the industry with millions of subscribers who will mention the app in YouTube videos. To get users is not a problem for the business and very easy. To make them active and paying users is more difficult and there are no such users at the moment because the app was not built after Learn Startup. Thats one of many reasons for the imense attacking of person A towards person E who presented as business and entrepreneurial professional.

All 4 partners excluded me, Person A, from discussions and out of nothing a right issue offer letter came per email from Person B who set up the company. 110,000 shares for 19,396.36 EUR. Every partner is offered to buy shares in the amount to keep his current %. It must be paid within one month. Person A doesnt know how much other partners pay. Person C says that he takes a loan to get the money for his shares.

So 40.000 Shares are currently there after 3 years of work and app development costs of 30,000 USDs. And 110,000 shares are sold for 19,396 EUR now, which is very cheap considering all the work that has been done.

My questions:

What is going on? Do they want to dilute my share or is it really that they want the money to push the business forward which Person B says. In my oppinion the money is really needed to go on because the app needs to be developed and no one in the team can do it.

However the team is also very rude to me because of my attack towards Person E till November 2017 and maybe other things which however are no attacks but suggestions, defending of myself...

Can Person B repeat this offering of new shares and lets say offer next time 500.000 shares for 10.000 EUR for example? My concern is that I don't want to pay money when this can just happen again and they can buy then more shares for cheaper money and i bought little share for more money.

What shall I do now?

Avinash Rathi Technopreneur | Doer

April 6th, 2018

You will find one most important thing in the whole scenario, Communication. This word has some real power. It can make your friends your enemies, even it can make your enemies your friend.

So communicate wisely. World's biggest problems are solved through dialogues and communication.

I would suggest you to meet each and every person. Get their views. Don't be in hurry. Try to make good relations. Show them their positive side and be nice. This will surely give you a positive result.