Founder versus board and investors
Founder disputes often begin when control shifts after venture financing. Preferred stock commonly carries protective provisions and board seats, and voting agreements may dictate who fills those seats. Removal of a founder as an officer is usually a board decision, while removal as a director depends on stockholder votes and the governing documents. Disputes then follow over the terms of departure, such as unvested equity, repurchase rights, restrictive covenants, and severance. Many startups are Delaware corporations, so Delaware law and its courts frequently shape the analysis even for a company run from New York.
The documents that allocate control
Review the current charter, including amendments adopted in each financing, the bylaws, the investors' rights, voting, and right-of-first-refusal agreements, your employment or offer letter, and your equity grant documents. Board minutes and written consents show how decisions were actually made. If you are still an officer or director, keep acting within your authority and avoid unilateral steps such as changing system access or contacting investors with accusations, which can be framed as a breach of your own duties. Side letters with individual investors can also carry rights that do not appear in the main documents.
Choosing a strategy
Our first conversation focuses on where control currently sits and what you want: to remain involved, to leave on fair terms, or to challenge a decision you believe was improper. Founders sometimes hold rights to information, to notice of board actions, or to approve certain transactions, and those can matter in negotiation. A challenge to a dilutive financing or a removal usually raises fiduciary duty questions about the board's process and any conflicts of interest. We weigh those claims against the founder's continuing stake in the company's value, since a public fight can harm the very equity in dispute. Timing matters as well, because a pending financing or acquisition can change both sides' appetite for a settlement.
