The Dark Side of Startups: How I Was Backstabbed as a Cofounder
1 comments
How was your equity "revoked"?
I was forced to sign a full exit contract to avoid being sued.
"The above is our final offer. Please give us your reply no later than Wednesday this week. After confirmation, we will sign the formal agreement no later than Friday this week. If you do not accept, we will put the new round financing work on hold and immediately initiate a lawsuit against Allen regarding labor relations, shareholder qualifications and directors' fiduciary duties. We have sufficient evidence of Allen's violations of the labor contract, employee handbook and shareholder agreement, such as his absence from work, providing services to third parties and obtaining benefits during his employment, and sending the company's confidential information to third parties. We will also fully disclose such situations to the market."
from the Lawyer.
"The above is our final offer. Please give us your reply no later than Wednesday this week. After confirmation, we will sign the formal agreement no later than Friday this week. If you do not accept, we will put the new round financing work on hold and immediately initiate a lawsuit against Allen regarding labor relations, shareholder qualifications and directors' fiduciary duties. We have sufficient evidence of Allen's violations of the labor contract, employee handbook and shareholder agreement, such as his absence from work, providing services to third parties and obtaining benefits during his employment, and sending the company's confidential information to third parties. We will also fully disclose such situations to the market."
from the Lawyer.
Always have your own attorney look over paperwork. In what country are you?
It doesn't sound like you want to pursue it, but you could make a case that you signed under duress. Not knowing any specifics about your situation, personally, I would focus on moving on to the next thing.
It doesn't sound like you want to pursue it, but you could make a case that you signed under duress. Not knowing any specifics about your situation, personally, I would focus on moving on to the next thing.
Can't agree more. Happened in China, though. The mutual release agreement even bans me from talking about it, but I have to get it off my chest.
In August 2020, Lauren, the founder of IceWhale Tech, approached me with what seemed like an exciting opportunity. Previously, I've been working at DFRobot, leading efforts in market expansion and crowdfunding in the LattePanda project with Lauren. Lauren believed my experience was critical to the success of their new venture, and I was invited to join IceWhale as a cofounder to help establish the company. I started working on overseas market development, branding, and crowdfunding campaigns for ZimaBoard during my spare time, encouraged by Lauren’s trust and the promise of a collaborative partnership.
By May 2021, I had so much faith in this vision that I resigned from my previous job, signed a three-year employment contract effective May 10, 2021, and became the Chief Marketing Officer (CMO). From 2021 to 2024, I dedicated myself entirely to managing the company's global marketing and sales strategies. As both a shareholder and an executive, I worked tirelessly, believing that together, we were building something meaningful.
However, things began unraveling unexpectedly. On December 6, 2023, I discovered a stamped procurement contract dated August 14, 2023, uploaded into the company’s official system. Strangely, I hadn’t been involved in initiating or approving this document, nor had procurement ever been part of my responsibilities—it was entirely within Lauren’s domain as the founder. Alarmed by this misuse of my identity, I raised concerns about internal management through the company’s system.
To my shock, my concerns were perceived as a direct challenge to Lauren’s authority, and the narrative quickly shifted—in their eyes, I had committed an act of “betrayal.” This sparked an aggressive series of negotiations where I was pressured, during seven separate conversations, to transfer 100% of my equity into an ESOP (employee stock ownership plan) under Lauren’s sole control. Despite the repeated demands, I refused to sign any agreement that felt unfair or coercive.
Then, on January 15, 2024, Lauren called an emergency board meeting for January 23. The agenda? Alleged “operational issues” in 2023. During that meeting, I was blindsided—I was immediately asked to transfer all my equity and completely resign from company operations by the board members and the lawyer.
While I was open to negotiating terms for a fair equity transfer, things took a darker turn. IceWhale stopped paying my salary and social insurance since December 2023—a move Lauren openly justified as a consequence of my “failure” to comply with the equity demands. This left me in a precarious position: unable to secure new employment due to the lack of proper separation documentation, unable to access pension insurance or healthcare benefits, and struggling to move forward.
After months of uncertainty, an inquiry by the local labor authority on March 26, 2024, revealed that Lauren had illegally terminated my employment contract on December 31, 2023, without issuing any formal notice or required separation documents. I was effectively cut off, both professionally and personally, without warning.
This experience was devastating—not just financially, but emotionally. Joining IceWhale Tech as a cofounder started as a leap of faith fueled by trust and ambition. It ended with betrayal, unpaid wages, revoked equity, and an unlawful termination of my employment.
For anyone considering joining a startup, particularly as a cofounder, I urge you to protect yourself. Double-check your employment agreements, equity arrangements, and your position within the company's operational structure. Trust is fundamental, but let my story serve as a cautionary tale—sometimes it’s not enough.
Allen Shen Ex co-founder at IceWhale