Leave Seed Stage Startup - Partnership Issues


My partner and I started an online service. When we formed the idea for the company, we came out strong with a lot of energy, but it seems as if my partner's priorities are now elsewhere.

I'm the only one networking and developing the website. I'm in contact with all of our business contacts and he simply doesn't bring anything to the table.

My decision is to not continue working with my partner, but I still want to develop our idea that I've been working on.

Our company is in the seed stage. We spent 6000 to have the website designed about a year and a half ago. We have not drafted a legal partnership agreement between us. No patents have been issued for our online service. I am about to contact lawyers to draft our legal documents and get the company legally started.

So my question is, how do I leave my partner while continuing to work on this idea? I see three options:

  1. Buy him out. Our only asset is our website which we paid 6000 for.
  2. Leave the company and start the same one under a new name. Is this legal?
  3. Ideal situation: he agrees to leave the company

Please let me know what your thoughts are on how I should proceed and what he's entitled to.

Thanks for all your help

Co-Founder Partner Legal Partnerships

asked Sep 2 '11 at 07:41
6 points
Get up to $750K in working capital to finance your business: Clarify Capital Business Loans

1 Answer


Watch out, you must do this the right way, or you may have to kill the site.

Step 1: talk to your partner and agree that he should stop. If he doesn't agree and is under the impression that he is still involved with the project, you have a major problem.

Then you can incorporate and probably give him some equity in exchange for his past contributions. Buying out doesn't usually make sense, since there is no actual shares of a partnership to buy.

Be aware that by default (in the US), you entered in a 50/50 partnership, so your partner has rights. Focus on the future, again, the key being that he agrees he is done.

answered Sep 2 '11 at 07:45
Alain Raynaud
10,927 points

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Co-Founder Partner Legal Partnerships