Startups & Shareholders' Agreement

Background

The client is a technology startup, founded by three co-founders.Each co-founder held an equal share of the company (33.33%) and initially agreed informally on their roles and responsibilities. However, they did not draft a Shareholders' Agreement when forming the startup. Based on an informal understanding between the founders, Founder A was responsible for product development. Founder B was the chief technology officer and Founder C acted as the Chief Executive Officer.

The Problem

The start-up was able to close a SAFE round in year 1. However, as the startup began to grow and attract more investors, several challenges arose. Amongst others, the co-founders disagreed on whether to pivot start-up's business model from a SaaS product to a marketplace platform. Also, one of the founders started dedicating less time to the start-up due to personal reasons, causing resentment among the other due two founders who were working full time. A venture