Before you do anything else, at all, take care of the paperwork. If you two part ways before everything's been formalized, you'll create a cloud of legal uncertainty over your start-up that'll make it very difficult to raise or have an exit.

In your agreement, you both should have a long period of founder vesting. Then, should you part ways, you can give your co-founder his share of equity multiplied by whatever fraction of the four years he worked.

Getting the paperwork right doesn't end with the shareholder agreements - you also need to make sure all the intellectual property is assigned to the company.

Actually, what you really need to do is sit down with a lawyer that knows what they're doing.

Exactly! Get with an attorney quick. Other option is to find funding and buy him out now. Sometimes investors like stepping in where there is a shakeup, they feel like a savior, get more equity and presumably, control. If you can do this, part of the deal will be the full release agreement along with ip assignment.

At this early stage of a startup before we have scaled, the leaving of a co-founder is likely a bad signal that would scare away any investors.

How do you have a 70/30 split with no contract?

we have a company and I own 70% of the shares, he owns 30%.

So that is a contract if you will.