Operator Intelligence from Evolette Locin: Venture Risk Architecture and B2B Deal Structuring, Singapore
1. The Operational Flaw: Splitting Equity on Day One and Planning for Nothing After
Two or three founders agree a split over coffee, a lawyer papers the share allotment, and everyone gets on with building. The split feels settled. What nobody has written down is what happens when one partner stops contributing, takes a full-time job elsewhere, falls out with the others, or simply leaves. Shares issued outright on day one belong to that person permanently, whether they stay for four years or four months.
The cost shows up later and it is structural. A departed partner who holds a meaningful block still has a vote on major decisions, a claim on dividends and a seat at the table when you raise capital or sell. Investors and acquirers see a cap table with a passive holder in it and either discount the deal or ask you to fix it first, usually by buying the shares back at a price set by the person leaving. The partner who stayed and carried the business is paying twice.
The second flaw is sequencing. Founders avoid the leaver conversation because it feels like planning for failure while everyone is optimistic. But it is the only time the conversation is cheap. Before anyone has left, the terms are abstract and apply equally to everybody. After someone has left, every term is personal.
2. The Live Proof-of-Concept: Partner Risk on Operating Ventures
We operate ventures that depend on a small number of people whose commitment cannot be replaced overnight. Miyu Omakase runs on a counter and a kitchen team, where the person behind the counter is the product. Winchester Tennis Arena, TAG International Tennis Academy and PickleChoo each rely on coaching and operating relationships that build value over years. In businesses like these, a partner who owns equity but no longer contributes is a direct drag on the P&L, because the economics assume everyone with a stake is carrying weight.
We do not publish the terms of our own arrangements or those of clients. What we can share is the approach: treat equity as something earned over time and conditional on contribution, and write the exit rules while the relationship is good. It is the same principle behind our work on writing the deadlock clause before you wire the capital and structuring the downside before you negotiate the upside. The same retention logic appears on the coaching side in our note on who owns the student owning the revenue.
3. The Execution Architecture: Six Terms to Settle Before You Issue Shares
Step 1: Vest the founders’ equity. Vesting means shares are earned over a stated period rather than owned outright from the start. A common structure runs over three to four years, often with a short initial cliff before any shares vest. The mechanics vary: shares may be issued upfront and subject to a buyback right on departure, or granted in tranches over time. Pick the version your lawyer confirms works cleanly under Singapore company law and your constitution, but do not skip the principle.
Step 2: Define good leaver and bad leaver. A leaver clause says what happens to a departing holder’s shares, and it usually separates two cases. A good leaver, such as someone who leaves through illness, death or an agreed exit, keeps vested shares and is paid fair value. A bad leaver, such as someone who resigns early, breaches the agreement or is removed for misconduct, may forfeit unvested shares and sell vested shares at a discount. Write the categories in plain terms, because disputes arise over the definitions, not the principle.
Step 3: Fix the valuation mechanism now. The most expensive argument in a partner exit is the price. Agree the method in advance: a formula tied to revenue or earnings, a valuation by an independent accountant, or a fixed discount for the bad leaver case. A method written today, when nobody knows who will leave, is far cheaper than a price negotiated across a table between people who no longer trust each other.
Step 4: Give the company a call option. Write the right for the company, or the remaining shareholders, to buy a leaver’s shares on stated terms, with a stated timeline for completion. Without it, the leaver’s shares sit in limbo, and the only way out is a negotiation in which the leaver holds the leverage. Pair the option with a payment schedule the business can afford, so a buyback does not drain the cash the venture needs to operate.
Step 5: Add restrictive covenants, with care. Non-compete, non-solicitation and confidentiality terms protect what the business built. They also have to be reasonable in scope, duration and geography, because Singapore courts examine restraints on trade closely and will not enforce an overreaching clause. Tie each restriction to a real interest, such as customer relationships or confidential know-how, rather than a blanket ban on the leaver working in the industry.
Step 6: Protect decision-making with reserved matters and transfer limits. List the decisions that need every founder’s approval, such as new share issues, large borrowing and a sale of the business. Add pre-emption rights, so a holder cannot sell to an outsider without offering the shares to existing holders first, and tag-along and drag-along terms so a minority cannot block a sale that everyone else supports.
Take the finished term list to a Singapore corporate lawyer to draft and check against the Companies Act, your constitution and any tax consequences of vesting and buybacks. The commercial work above makes that review shorter, because the lawyer is drafting agreed positions rather than helping you discover them.
4. The Asymmetric Advantage: Why Hour-Billing Advisers Cannot Replicate This
A corporate lawyer will draft whatever terms the founders instruct, and an incorporation service will file a template that gives every founder fully vested shares on day one. Neither of them lives with the result when a partner goes quiet in year two. An academic consultant can explain vesting in a diagram and has never had to buy back a stake while the business needed that cash for rent and payroll.
An operator tests each term against a live P&L. We know what a buyback does to working capital, how long it takes to replace a key person in a booking-led business, and which clauses founders accept happily and later resent. That is what lets us rank the terms that matter for your venture and flag the ones that need a lawyer’s judgement. We stay within that boundary: we shape the commercial structure, and a qualified Singapore lawyer drafts and advises on the law.
5. The WhatsApp Conversion Bridge: Request a Private Portfolio Audit
If your shares were issued fully vested, your agreement is silent on leavers, or a partner has already drifted, start with the documents. We review the cap table and the agreement, run the exit scenarios against your cash position, and return a ranked list of the weakest provisions with the questions to take to your lawyer and your co-founders.
Request a Private Portfolio Audit via WhatsApp.
This article is general commercial commentary, not legal, tax or financial advice. Have any shareholders’ agreement, vesting arrangement or share buyback reviewed by a qualified Singapore lawyer before you sign or act on it.
