I am a "co-owner" of a startup, and this thing is getting the wrong way, please advise?

Question

I was approach to start up a new company where the way certain industry does the bussiness will change thanks to the state-of-the art software I will build. They gave me 25% of ownership signed and notorized.

Company does not make money yet (software written in 80%). Two other co-owners are brothers. Lately we had some decisions to make and I was against but they said "you cant do a thing you have a minor share".

If I finish the software and the company starts making money, they can say "we vote against being paid for the next year and put all money in growing the business". I dont want to be their slave and work for nothing that maybe one day they will change their mind and start paying a salary to me.

Q1: Should you go on and do what they want (I am only a programmer, not a business man) and later when company grows and makes significiant $$$ try to sell that document to some smarter businessman?

Q2: who would want to buy an ownership that gives a minor vote(no power I guess)

Answer 1

It is simple: you have been had!

For $200 or less, form your own company AFTER telling the other folks that they are up to no good by you.

Resolve and dismiss any relationship with the prior company LEGALLY, so that you have a better position to work from.

Being an inventor, you are NOT all a business needs;

but if you do not have your say,

then there is NO BUSINESS.

(unless someone cheats)

Answer 2

Find a 'pro bono' copyright lawyer, and don't hand over your software - Period!

Tell the 'brothers', that you want to sell them your 25% interest. Do not get into an argument or even mention the software...just that you want to sell your 25% and you are giving them first right to buy it or you will sell it to the first person who comes along.

You are about to be swindled..you do the work, they get all the benefit and at some point, your software becomes the property of their company.

Bail out. Dreams of glory are ashes until they materialize.  If you can't afford or can't find a lawyer, tell them the 'sell' story because if your product is a good one (and you appear to believe in it), getting out of this bad agreement is the first thing you want to do.

Good luck.

Answer 3

This is going to be entirely dependent on the specific terms of your agreement with your partners, so there really isn't enough information to be able to fully answer your question.

To answer your second question, your partners may opt to buy you out.  Your agreement with them, if it was drawn up by someone who knows they are doing, should already address partner buy out options.

Answer 4

Trust between partners in a business venture is the single most critical factor in success or failure.

If your trust in the 2 brothers is compromised, then you will indeed find it very difficult to make the company successful.

I suggest you get them to provide you written guarantees of compensation that you will get as and when revenues come in;  for example you could ask for a guaranteed base salary, plus a % of the gross ( or net ) revenue.

If they do not agree, then it would be a big red flag.  You may well decide to seek other partners and strike out on your own.

You should also have written contracts on how you can dispose of your equity - for example, you can only sell to other partners, or they have the first right of refusal, etc.

And lastly, what have you done about the Intellectual Property rights for the software?  Do you retain the rights, or have you signed them away to the company? ( If you own the rights, you could simply demand a royalty for the software instead of being a partner.)