New ask Hacker News story: Ask HN: Giving new co-founder 40% equity at seed round?

Ask HN: Giving new co-founder 40% equity at seed round?
3 by throwaw87 | 0 comments on Hacker News.
I have a C-Corp and want to bring in a new 30-40% co-founder at a possible upcoming $5M valuation seed round. The problem is, every scenario I look at ends up with him paying unaffordable taxes, even if he vests 10%/year -- he is just out of college. We have minimal cash and may not be able to restructure the shares before the seed round if it's expensive to do so. (The seed round isn't guaranteed but looks promising.) I own 90% currently (RSUs reverse vesting), we have a 10% early investor (preferred stock), and our current legal fees are deferred until the seed round (would it be typical for them to do this restructure, even if the seed round isn't guaranteed?). Even then, our current valuation is about $1M based on the early investor, which would still impart some taxes (especially with reverse vesting). With RSUs and options, I believe he'd have to pay for the stocks at the new $5M valuation. We could maybe buy back some of his shares to help pay the taxes, but I doubt investors would consider that good use of their money? Either way, I don't want to lead our new co-founder on if there's no way to structure this. Would any of you have any idea how I might be able to make this work? Would be super appreciated. (He's been integral from the very beginning, which is why I wanted to give about equal equity instead of a seed-round-funded market salary.)