HACKER Q&A
📣 throwaway7716

I was diluted out of a $4B IPO. Can I do anything about it?


Hey all not sure who to ask or how to approach this so I figured I’d give HN a try. I’m a founder of a startup that has decided to IPO this year. The IPO will be somewhere in the ballpark of $2-4B. A couple years ago I left the company due to a disagreement on direction, and signed a document releasing 90% of my equity for further fundraising rounds, leaving me with around 1% total remaining. I am young and this is my first startup experience. I was led to believe this number would not change but don’t have that in writing because I’m inexperienced and didn’t know I should do that.

Fast forward to today, and I’m sitting on 0.02%. Essentially nothing, and I just found out about my dilution this week after learning about the IPO, and excitingly thinking I had 1%.

My question is, is there anything I can do? It feels like my lack of experience is exactly what was leveraged to allow this to happen. Just because it’s legal, doesn’t make it okay. I accepted a drop from 20% of the company to 1% when I left, but being diluted below that point just feels insulting.

Any help would be much appreciated. 1% would be life changing for me and my family.

  👤 WheelsAtLarge Accepted Answer ✓
Talk to a lawyer but mostly the company's majority owners can do whatever they want in terms of how the company's finances are run. I bet something you signed said something about dilution. Dilution happens to most stock based companies since they mostly need money for operations until they are profitable. They could even have cancelled your stock,with notice, and left you with nothing if they could justify it. With startups the bar is very low. Since you left, you're lucky you got anything. But anyhow, your best bet is to get all your paperwork and take it to an experience corporate lawyer.
👤 sharemywin
Do you still know the co-founders? I wouldn't want to be known as the people that f*cked over the little guy because he/she left the company.

Now's the time to act they're not going to want the negative publicity.

That's exactly what happened in the social network.

👤 gus_massa
Talk to a lawyer. The devil is in the details, so you should talk to a lawyer.

Anyway:

How much equity does the other(s) founder have now? Did they get the same dilution?

How much time did you work there before resigning?