The option pool a Brantford startup thought it controlled

The situation

Vaishali noticed it first, scrolling through a spreadsheet the company's accountant had sent ahead of an investor call. A line item labelled advisor allocation showed a number nearly three times larger than either she or Bassam remembered ever agreeing to. She read it twice, then called Bassam before she had even finished her coffee.

The two of them had built their Brantford company over the past two years, working nights and weekends around their day jobs, Vaishali as a transit operator and Bassam as a baker, until the business, a specialty equipment supply operation serving small food producers, grew enough to support them both full time. Revenue had climbed into the high six figures, and a modest funding round was now on the table to help them scale up hiring. As part of preparing for that round, they had set aside an employee option pool ahead of time, a common step meant to ensure that dilution from the new investment would come out of a pool reserved for future hires rather than eating directly into the founders' own ownership.

The pool had been sized carefully with their accountant, based on how many people they expected to hire over the next two years. What Vaishali found in the spreadsheet suggested that a meaningful chunk of that pool had already been promised away, to Karim, a technical advisor who had given the company informal guidance in its first year before either founder could afford to pay him properly. Karim had mentioned, back then, that he expected some equity for his time, and the founders remembered a loose conversation about it, but neither of them recalled agreeing to anything close to the figure now appearing in the pool allocation.

When they asked their accountant where the number had come from, the answer was unsettling in its simplicity: the accountant had pulled it from an old advisor agreement in the company's files, one that predated the accountant's own involvement and that neither Vaishali nor Bassam remembered signing in that form.

What made the moment sting was the timing. The founders were two weeks from finalizing terms with an investor who had already asked pointed questions about how much of the pool was already spoken for. A dispute over a large, unresolved advisor claim, surfacing right before a round was meant to close, risked reading to the investor as a sign the founders did not have a firm grip on their own cap table, which was almost as damaging as the dollar figure itself.

What the other side was relying on

When we asked Karim directly what he believed he was owed, he pointed to a signed advisor agreement from the company's first year, one that set his allocation at a fixed percentage of the company's fully diluted shares rather than a fixed number of options. Whether that meant his claim would keep pace with the option pool as it grew ahead of the funding round, or had already locked in as a set number of shares at the date of grant, turned on wording in the agreement that neither founder had a copy of to check. If accepted at face value, that agreement would have consumed a disproportionate share of the very pool the founders had just set aside for new hires.

The problem was that neither founder had a signed copy of that agreement in their own records. The company's early paperwork had been handled informally, with documents drafted and exchanged through a family friend of Bassam's who had helped out with some early administrative work and had since retired from that kind of involvement entirely. It was this retired friend, someone with no stake in the current dispute at all, who turned out to be the only person still holding a signed copy of the original agreement in a personal filing cabinet, since the company's own digital records from that period had been lost in a laptop replacement two years earlier.

That put the founders in an uncomfortable position. Karim's version of the agreement, the one he had produced, showed the larger, percentage-based allocation. Without an independent copy to compare it against, there was no way to confirm whether that version reflected what had actually been signed or whether it had been altered, redrafted, or simply misremembered in the two years since. The entire dispute turned on a document that neither party to the disagreement actually controlled.

Locating the retired friend and confirming the state of his files took time, and until that happened, Karim's position rested on being the only one holding a copy of the agreement in circulation, which gave him more leverage in early conversations than the underlying facts may have ultimately supported. It also meant the founders could not simply reject his claim outright without first knowing what the original document actually said.

Karim, for his part, did not appear to be acting in bad faith so much as working from a genuine but incomplete memory of an arrangement made two years earlier, under informal circumstances, without either side treating it as carefully as a later-stage company would. That distinction mattered for how the conversation was eventually handled: this was a document dispute to resolve with facts, not a bad actor to fight off.

What we did

1. Asked Karim to produce his copy of the agreement in full, not just the relevant clause. A single excerpted paragraph can be read out of context, so we requested the complete signed document, which let us see the surrounding terms, including a section suggesting the advisor role was meant to be time-limited rather than open-ended, a detail Karim's initial summary had left out.
2. Located the retired administrative contact holding the original file. Working from old email threads, we traced the company's early paperwork to the family friend who had helped with administrative work in the founding year, and arranged to have him locate and share whatever signed copy remained in his personal records. Because he had stepped back from the company years earlier, it took several rounds of outreach through mutual contacts before he confirmed he still had the file, and longer still before he located it.
3. Compared both versions clause by clause once the original surfaced. The retired contact's copy matched Karim's on the core numbers but included a vesting condition tied to Karim continuing to provide advisory services, a term Karim's own summary of the deal had not mentioned, which meaningfully changed how much of the allocation he could actually claim given that his active involvement had ended over a year earlier.
4. Assessed how much of the pool the vesting condition actually supported. Once the vesting term was confirmed, we calculated what portion of Karim's original allocation had genuinely vested based on his period of active involvement, which came out well below the full amount he had been claiming from the spreadsheet. We set out the calculation in a short memo showing the math month by month, so Vaishali and Bassam could see exactly how the lower figure had been reached rather than simply being told to trust a smaller number.
5. Opened a direct conversation with Karim grounded in the confirmed document. Rather than starting from a dispute over what the agreement said, we were able to bring a verified copy to the table, which shifted the conversation from a disagreement over facts to a negotiation over a number both sides could now see clearly. Once both sides were reading from the same document, the conversation stopped being about who remembered the deal correctly and became a narrower discussion about what the vesting terms actually supported.
6. Negotiated a reduced, fixed-number allocation in place of the original percentage. We proposed converting Karim's claim into a fixed number of options reflecting his vested portion, removing the percentage-based mechanic and the uncertainty over whether it would track the pool as it grew, and Karim agreed after reviewing the vesting analysis himself. Fixing the number also meant his allocation could no longer be read as competing with future hires for a growing share of the pool as the company scaled, which was the underlying uncertainty the founders most needed resolved before the round closed.
7. Documented the settlement and formally closed out the original agreement. We prepared a signed settlement confirming Karim's final allocation and releasing any further claim under the original advisor agreement, so the matter could not resurface later as the company grew and the pool's value increased. The release specifically addressed the percentage-based formula in the original agreement, so there would be no argument later that the fixed allocation was merely a floor rather than the full and final resolution both sides had agreed to.
8. Briefed the investor on the resolution before it could raise fresh doubts. Once terms were settled with Karim, we helped Vaishali and Bassam prepare a short, factual summary for the investor explaining what had been resolved and how, so the round could close on schedule without the dispute looking like a sign of disorganization on the founders' part. We kept the summary focused on the resolution itself, since investors care more about whether a cap table is clean now than about how it became messy.

The outcome

Karim received a fixed allocation from the option pool reflecting the period he had actually been active as an advisor, well below the figure that had first appeared in the accountant's spreadsheet but more than nothing, recognizing that his early guidance had been real even if the scope of what he was owed had been overstated. Vaishali and Bassam kept the bulk of the pool intact for the hires they actually needed to make as the company scaled after the funding round.

Neither side walked away with everything they had started the conversation believing they were entitled to. Karim gave up the open-ended, percentage-based claim and the uncertainty over whether it would have grown alongside the company's success. Vaishali and Bassam gave up the idea that Karim's early help entitled him to nothing at all, a position that had been tempting once the inflated number first appeared but that the vesting terms in the actual signed agreement did not support.

The company closed its funding round on schedule, with the option pool sized correctly for the investors' expectations and no unresolved claim sitting against it. Vaishali later said the most useful thing to come out of the dispute was not the settlement itself but the habit it left behind: every agreement the company signs now gets a digital copy stored in at least two places, so no future disagreement depends on tracking down whoever happened to be holding the paper file when the company was too small to have a proper system for it.

The investor, once briefed on how the matter had been resolved, raised no further questions about the pool and the round closed within a few weeks of the original schedule. Bassam noted afterward that the delay had been uncomfortable but not, in the end, costly in the way he had feared during the first tense conversations with Karim, a distinction he credited to having the actual document in hand before anyone tried to negotiate a number.

What you can learn from this