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A Prenup Is The Latest Must-Have For Tech Startup Founders In Love

A Prenup Is The Latest Must-Have For Tech Startup Founders In Love

prenup
The new buzzword in Silicon Valley these days is prenup. Many tech founders are making sure to seal the prenup deal before tying the knot. Photo by Laura Margarita Cedeño Peralta on Unsplash

Divorce isn’t easy. And when it comes to tech startups that have become hugely successful things can get even stickier. So the new buzzword in Silicon Valley these days is prenup. Many tech founders are making sure to seal the prenup deal before tying the knot, especially since under California law any wealth created during a marriage is community property. This property must be split equally in a divorce. This is not only a concern for tech entrepreneurs but also their investors. 

“Fortunately, a well-written prenup is a safeguard against post-divorce havoc, which is why more and more young couples are insisting on the agreements, according to more than half-a-dozen lawyers in the Bay Area and elsewhere. Long popular with older wealthy couples who re-marry, prenups are also being demanded by entrepreneurs who want to keep future windfalls to themselves,” Bloomberg reported.

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“I am seeing more and more young people want to enter into prenuptial agreements who do not currently have a lot of money now but plan to have a lot of money someday,” said Manhattan-based divorce attorney Jacqueline Newman.

There is a good reason for prenups in the tech startup world. When Google co-founder Sergey Brin and Anne Wojcicki, who helped found personal genomics company 23andMe, married in 2007 they had a  prenup in place. They divorced in 2015, and Brin’s stake in Google remained the same due to the prenup.

Take Oracle Corp.’s Larry Ellison as another example. He has been married and divorced more than once, but divorce has never affected his stake in the software company. Ellison, the seventh-richest person in the world with a net worth of $59.8 billion, according to the Bloomberg Billionaires Index, has used prenups.

A prenup doesn’t always protect one’s assets. It can be challenged if it is poorly written. 

 “If you don’t put in the right language, a lot of prenups don’t do the job,” said Lowell Sucherman, a divorce attorney at Sucherman Insalaco.

“Venture capital firms often demand that founders’ husbands and wives sign ‘spousal consent’ forms. Such agreements determine who gets to vote for board members, and how and when shares can be sold. In the event of a divorce settlement (or death or disability), a founders’ spouse might end up with company shares. But, the agreements ensure that an ex can’t exercise much, if any, control over the company post-divorce,” TK reported. 

“We’re trying to make sure that people don’t become involuntary business partners with someone they don’t know, don’t like or who aren’t qualified,” said James Ficenec, a partner at Newmeyer & Dillion.

When MacKenzie Bezos and Amazon.com Inc. founder Jeff Bezos divorced earlier this year his wife took a 4 percent stake and a net worth of $34.6 billion, according to the Bloomberg index. He kept 75 percent of the couple’s Amazon shares. He also retains voting control of her 4 percent.