[gyardley]

Before you do anything else, at all, take care of the paperwork. If you two part ways before everything's been formalized, you'll create a cloud of legal uncertainty over your start-up that'll make it very difficult to raise or have an exit.

In your agreement, you both should have a long period of founder vesting. Then, should you part ways, you can give your co-founder his share of equity multiplied by whatever fraction of the four years he worked.

Getting the paperwork right doesn't end with the shareholder agreements - you also need to make sure all the intellectual property is assigned to the company.

Actually, what you really need to do is sit down with a lawyer that knows what they're doing.

[bootdaddy]

Exactly! Get with an attorney quick. Other option is to find funding and buy him out now. Sometimes investors like stepping in where there is a shakeup, they feel like a savior, get more equity and presumably, control. If you can do this, part of the deal will be the full release agreement along with ip assignment.

[tommartin12]

At this early stage of a startup before we have scaled, the leaving of a co-founder is likely a bad signal that would scare away any investors.