Technical Founder With 0% Equity - Built The Product, Brought The Idea, Won The Grant. How Screwed Am I?

Location: Canada

I need help understanding my legal position before I walk into a negotiation next week. I’ve retained a lawyer but want to pressure-test my thinking here first.

About a year and a half ago I had an idea for a software platform in a regulated industry. I’m a developer, not a domain expert, so I knew applying for a government innovation grant on my own wouldn’t carry much weight.

But I had an existing contract relationship doing marketing and web work for a company run by someone with deep credentials in the field. I pitched them the idea and we agreed to apply for the grant together under their company because their professional background would give the application credibility. I wrote the grant application. They contributed the domain legitimacy.

We didn’t negotiate equity or compensation upfront because we didn’t know if the grant would be approved. It was a speculative shot. None of us wanted to spend weeks lawyering up over ownership of something that might never get funded. The understanding was that we’d figure out the formal structure once we knew if the money was real. So I kept building.

The grant was approved. Full amount, six figures. And because I was already doing contract work for these people, it made sense to just keep going and formalize everything once the money landed. I know. I should have stopped and negotiated right there. I didn’t. I trusted that we’d work it out fairly because we had a good working relationship up to that point.

So I kept building. I’m the sole developer. I’ve built the vast majority of the platform. No other technical person has touched this project.

Now here’s where the story turns.

There are still zero formal agreements in place. No employment contract. No contractor agreement. No IP assignment. No NDA. No non-compete. No shareholders agreement. I hold 0% equity.

The other people involved split ownership between themselves when the company was incorporated.

The grant money recently hit the company bank account. I have no visibility into the finances, no signing authority, and no seat on the board.

When I originally proposed the budget to the granting body, I allocated the vast majority of the funds to development costs because that’s what the project actually is — software development. Small allocations for project management, infrastructure, compliance, and testing made up the rest.

But the financial decision-maker in this situation isn’t one of the actual founders. It’s a family member. This person has no formal role in the company, isn’t a shareholder, isn’t a director, isn’t named on the grant. But they run the negotiation.

This person came back with a counter-proposal that slashed my compensation to roughly a third of what I originally budgeted and offered me a small minority equity stake.

That works out to well below half of market rate for full-time senior development work in my province. A minority stake for the person who conceived the idea, wrote the grant, and built the product.

But it gets worse. Their proposed includes a payment to a family member that violates the related persons clause in the investment agreement with the granting body.

The other aspect of their family members proposed budget includes paying the other co founders.

And when you compare the hourly rates, the non-technical people in their budget would be making several times what I’d be making per hour as the sole developer. The entire project is a software build and the person building the software would be the lowest paid person involved.

One of the actual founders suggested meeting in the middle during the conversation. The family member shut it down immediately. So someone who actually owns the company was willing to compromise and someone with no legal standing in the company overruled them.

I also did some public records research on this family member. What I found goes back over two decades. Multiple fraud-related court findings including corporate veil piercing and punitive damages. A pattern of transferring business assets to relatives’ companies for next to nothing. A criminal fraud guilty plea for stealing from an employer. And recent litigation where every appeal was dismissed and costs were awarded against them. This person is now the one managing a six-figure government grant budget with no formal oversight.

I haven’t signed anything. My understanding is that under Canadian copyright law, since there’s no IP assignment agreement, I likely still own the code I wrote.

I believe I may have claims around IP ownership, unjust enrichment, and reasonable compensation for work performed. There was a clear understanding that equity and compensation would be formalized once the grant was approved, and now the terms being offered don’t reflect what was discussed or what my contributions are worth.

On top of that, their proposed budget appears to violate the related persons clause in the investment agreement with the granting body, it also violates the the fair market labour pay to person related to the completion of the project and the person driving the financial decisions has a documented history of fraud-related court findings going back two decades.

I want to confirm that before I walk into this meeting.

I’m planning to present a counter-proposal that addresses the compensation gap, bundles in the equity discussion, and raises the investment agreement compliance issues as objective facts that need to be resolved before I sign anything. My lawyer will be involved.

I know you’ll probably think I’m an idiot but I negotiated in good faith until the family member demonstrated there wasn’t any good faith. What should I think about or do? What should I absolutely not do? I’m in western Canada.