Location: Delaware.Hi everyone,
I’m in a really difficult situation right now and could use some advice from founders or people who’ve gone through co-founder disputes.
About a year ago, I co-founded a Delaware C-Corp startup with a friend. We started from nothing. Over time, we raised a few million dollars in funding.
I also spent my own money early on when the company had almost nothing. We never paid any salary to ourselves so far.
Over the past several months, things became increasingly difficult. I was gradually locked out of company systems and accounts (banking, email, communication, office access, etc.). Eventually, I was removed from the board/company through actions that I believe may not have been properly handled procedurally.
Some things that concern me:
I believe certain board meetings or approvals may not have actually occurred the way they were described to me.
I have evidence suggesting at least one person who signed corporate documents may not have been fully informed.
I discovered communications where another person was presented externally as a “co-founder” without my knowledge while I was still actively building the company.
I no longer have access to many company records and don’t know what is happening internally.
The company is using company money for lawyers, while I currently have very limited resources.
I was offered settlement money which is insultingly low.
I’ve spoken with a few Delaware lawyers already. Most require very large retainers that I simply cannot afford right now. I’ve been considering filing a Delaware Section 220 books-and-records action pro se to at least obtain records and preserve evidence, but I’m unsure whether that’s realistic without counsel.
A few questions:
I think I have evidence of breach of fiduciary duty, freeze out, self dealing and misuse of the company funds.
Has anyone here dealt with a co-founder freeze-out situation after fundraising?
Is filing a Section 220 action pro se realistic, or is it a waste without a lawyer?
Has anyone successfully found startup/corporate litigators willing to work on contingency or hybrid arrangements? Will advancement of the legal fees work when I sue them?
How do founders protect themselves in situations where the company controls all the money and legal resources?
I’m honestly exhausted and overwhelmed by the situation, but trying to think clearly and make smart decisions.
Any advice would really mean a lot.
Thank you!