As crappy as this is... There's a hard case the CEO would have never raised a dollar if there was 15% of zombie equity on the cap table, making this guys 15% stake worthless anyway.
However, if he refused to sell his 15% stake, there's absolutely no reason why you wouldn't incorporate a separate business all together, especially if you were on the cusp of fundraising a massive round.
Summary: Bad business by the CEO, poor thinking by the stakeholder, Bad due-diligence by the VC firms. /end
However, if he refused to sell his 15% stake, there's absolutely no reason why you wouldn't incorporate a separate business all together, especially if you were on the cusp of fundraising a massive round.
Summary: Bad business by the CEO, poor thinking by the stakeholder, Bad due-diligence by the VC firms. /end