Adir Shifman sitting at a desk

‘The Shiffman’: legal structure to stop start-ups falling apart when a founder leaves early

Serial entrepreneur, investor and executive chairman of Catapult Sports Adir Shiffman has seen so many start-ups fall apart in acrimonious dispute when a founder leaves, that he wanted to do something about it with his latest venture,

When setting up the online research firm he sat down with lawyers from Arnold Bloch Leibler to try to get down in black and white, just what should happen when one of a founding team decides to jump ship in the early years of a growing firm.

They are so confident that they have got it figured out that they are intending to offer the structure – known as ‘”the Shiffman” – as an option for other start-ups to use when setting up the rules of their own operations under Australian laws.

Under the structure, which seeks to offer similar start-up friendly conditions as those enjoyed in the US and Israel, if one of the founders leaves after only a year or two, the remaining founders can get back equity without triggering a tax event.

The structure took months to create with the help of Arnold Bloch Leibler partner Michael Dodge, who ended up devising a way for the four co-founders to settle on an agreement wherein they all received portions of equity in the business after one, two and three years.