Prevent founders from leaving startup and cloning it in order to regain their equity?


It seems like there can be incentive for founders to give away equity to incubators, seed investors and co-founders, and then drop the startup and build a new one doing a similar thing but keeping most of the equity.

I'm hoping to find options to reduce the chances this could make my equity as a co-founder worthless in the future.


asked Jul 17 '11 at 07:27
Ashton M.
83 points
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1 Answer


That's a valid concern. It doesn't happen much, but it's still a good idea to guard against it, within reason.

There are 'market' reasons against: Every startup requires time to build brand awareness, web presence, connections, etc. Leaving a startup that already has some momentum implies loosing this, and having to start over from scratch.

There are 'reputation' reasons against: This would be especially strong if institutional investors (VCs) are required for the 'cloned' startup -- a call from the old VC team to the new VC team could sink the founders reputation.

There can be / should be legal reasons against: The specifics will vary from country to country, but there are several possible places to attempt to regulate this.

You should go see a lawyer and obtain qualified advice relevant to your legal system and your specific situation. But bottom line, this issue can be addressed with a little bit of forethought.

answered Jul 17 '11 at 08:56
Jesper Mortensen
15,292 points

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