HACKER Q&A
📣 throwaway11x11

Is VC fundraising considered a partial sale of the company?


TLDR: I was employee at a startup that gave me equity and secretively clawed it back then fired me few months later. Is the law around "sale of company" established to be a full sale of company or can it be a partial sale (e.g. equity to VCs)? Can I effectively pursue legal action against the startup?

I've worked at the startup before they had major traction and had equity as part of the my compensation with a 4 year vesting period. After my equity has fully vested and before the company publicly announced a major round of VC fundraising (first round ever), the company asked me to sign a new agreement without any equity. I was sent the a new employment contract at 9am and was asked to sign it by 5pm during a busy work day. I didn't have enough time to carefully review its terms or seek advice of counsel. Few months later, the startup fired me, so I curiously reviewed my 2 employment and noticed that the equity clause was missing from the new agreement, thus sparking this question.

Under the old employment contract, the terms of the equity were that I had to be a full-time employee at the time of "sale of company". Does partial sale of company (e.g. equity) to VCs count as "sale of company" and thus trigger a bonus for me?

Please ask clarifying questions if you need more details before providing an answer. I greatly appreciate your advice.


  👤 raltok Accepted Answer ✓
Hi everyone,

We’re launching a live course on software startup formation with Shawn Kung, Venture Partner at AV8 Ventures, a VC firm based in Silicon Valley. He’s also an angel investor at Y Combinator Demo Day as well as a Stanford Lecturer. The course includes:

- 6 weekly live lectures with Shawn and all the other students (2h each)

- Guest speakers (founders & investors from Shawn’s network)

- 1-1 office hours

- Unlimited Q&A on the course private Slack channel

- Startup mini project where students will form teams and pitch a business idea to Shawn

- Lifetime access to Shawn’s Slack channel & private LinkedIn group for alumni

We are 75% full. Class is capped at 50 students. The live course will kick off on July 23. Schedule for the lectures is 5-7pm PT.

Link: https://flatwyse.com/venture-startup-formation


👤 allenleein
I'm so sorry to hear this, I have witnessed my ex CEO did the similar things to my colleague. I can imagine how horrible the feeling might be.

I'm not legal expert, I really hope someone here can help you with that. IMO, I think the fastest way to get justice is to expose this kind of founder to a powerful media, like Susan Flower did to Uber, but anonymously.