Why Founders Should Never Rely on Verbal Promises of Equity: Lessons from the Radish Media Litigation

Startups are often built on speed, trust, and momentum. Founders and early employees dive in together, fueled by a shared vision and—frequently—handshake deals about equity. But as the Lim v. Radish Media saga shows, relying on verbal promises of ownership can become a multi‑year legal nightmare with zero payoff.

In two rounds of litigation—Lim v. Radish Media (2024) and Lim v. Radish Media (2025)—the courts repeatedly rejected an early employee’s attempt to claim equity that he believed he had been promised. The case is not just a story about one startup dispute; it is a cautionary tale for any founder, early hire, or startup leader who relies on informal commitments.

Below are the key lessons every founder must take to heart.

1. A “Handshake Deal” Isn’t a Deal—Especially for Equity

In both complaints, Lim argued that Radish’s CEO had promised him equity—first 1.2%, later 1.5%—in exchange for lower cash compensation. The alleged promises were:

• verbally discussed between friends,

• followed by email exchanges acknowledging “basic terms,” and

• reinforced through repeated assurances that “paperwork would come later.”

But none of that mattered. The courts found the supposed agreement unenforceable because equity grants take longer than one year to vest, which triggers the Statute of Frauds. That law requires that long‑term commitments—especially those involving ownership—must be in a signed writing to be enforceable.

Even though Lim provided messages from the CEO agreeing in principle, the court held that:

• the emails did not include all essential terms,

• the draft offer letter was never signed, and

• the equity grant was conditioned on events that never happened (like board approval and a formal equity plan).

Bottom line: If equity isn’t documented and signed, it isn’t real.

2. “We’ll formalize this later” is a red flag, not a promise

A recurring theme in the case is that Lim stayed at the company—turning down higher-paying offers—because the CEO repeatedly urged him to “be patient,” assuring him that the equity was coming. But the courts dismissed these kinds of statements as too conditional and too informal to form a “clear and unambiguous promise.” Equity that depends on:

• board approval,

• stock option plan creation,

• adjustments after a stock split, or

• future negotiations

…is not a definite promise. It is a maybe.

And a “maybe” is not enforceable.

3. Even documented promises fail if conditions aren’t met

Lim eventually received a draft offer letter that spelled out share numbers and vesting schedules. But this still wasn’t enough. Why? Because:

• It was sent after Lim had already resigned,

• The CEO told him not to sign it, and

• It explicitly stated that the grant required board approval and a formal stock option agreement.

Courts treat these conditions as gating items. If they don’t occur, the promise has not ripened into an obligation—no matter how unfair that may feel.

4. Promissory estoppel won’t rescue a vague equity promise

Lim tried a fallback argument: even if no contract existed, he relied on the CEO’s promises to his detriment and should be compensated. But promissory estoppel only works when the promise is:

1. clear,

2. unconditional,

3. reasonable to rely on.

Here, none of those were satisfied. The alleged promises depended on future events Lim knew had not yet been completed. His reliance—continuing to work, declining other offers, accepting more responsibility—was not enough to overcome those uncertainties.

In 2025, the court dismissed the claim with prejudice, ending the dispute altogether.

5. The harsh reality: Courts don’t award equity because it “feels fair”

Lim argued that, had he received his promised shares, he would have received more than $2.2M in the company’s later acquisition. The court didn’t disagree that Lim felt wronged; it simply found that:

• Without a signed equity agreement,

• Without board approval,

• Without a finalized stock plan,

…he had no legal rights, regardless of fairness.

The court even reiterated that monetary disappointment is not “unconscionable injury”—it’s just the natural result of relying on an unenforceable promise.

What Founders Should Learn From This Case

1. Put every equity promise in writing—immediately.

Do not hire, retain, or negotiate equity with anyone based on verbal or informal promises. If you wouldn’t invest based on a handshake, don’t hand out equity that way.

2. Use signed offer letters and stock agreements from day one.

Equity requires:

• a written offer,

• board approval,

• a stock option or equity plan,

• and a signed equity agreement.

All four must exist.

3. Never tell someone “your equity is coming soon” unless it actually is.

Statements like “don’t worry, it’s yours” become Exhibit A in litigation.

4. Do not rely on friendship as a substitute for governance.

Lim and the CEO were close friends for more than a decade. That didn’t matter.

5. If equity paperwork is delayed, the employee is not “earning equity”—they are earning risk.

Delay benefits the company, not the employee.

Conclusion: Protect Your Startup (and Yourself) With Real Agreements

The Radish Media case is a stark reminder that startups don’t run on trust—they run on documentation. Verbal promises feel fast and founder‑friendly, but when a business succeeds, those early “friendly” deals become multi-million-dollar disputes.

If you are a founder:

• Document everything.

• Get signatures.

• Involve your board early.

• Never rely on goodwill to substitute for legal structure.

Because someday your company might sell for $440 million—and if your promises aren’t in writing, the courts won’t treat them as promises at all.