Questions

Do I dissolve the c-corp formulated on an original product concept if a co-founder has resigned and the company has pivoted?

The original product did not gain sufficient transaction. My co-founder has resigned due to a conflict of interest. The company has pivoted and a new product created. Do I form a new company with the new product and dissolve the other. Thx.

1answers

The answer depends primarily on two factors:
1) Do you have outside investors?
2) Do you have and/or could you obtain a legal release from the co-founder, and after this release, would the co-founder have less than 5% of the company?

If you have outside investors in the existing corp and you wish to pursue the pivot, I would strongly encourage you to continue within the same corp, unless you didn't properly organize your co-founder agreement, in which case, your co-founder has "dead equity" which makes further funding much more difficult.

This advice is not being provided based on a legal expertise but rather a practical perspective as both an entrepreneur and investor in early-stage companies. Happy to provide more specific advice if I understand the context better.


Answered 7 years ago

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