Background

Butterfly AI was built to solve a very modern problem: managers have more data and tools than ever, but understanding how their teams actually feel is still hard. Butterfly gives leaders a way to capture real-time feedback from employees and turn it into clear, actionable insights on engagement, morale, and performance.

From its base in New York, the company grew into a global platform serving organizations with large frontline and distributed workforces. With that growth came a familiar set of founder questions: How do we finance the next stage without overextending? How do we look after the team if we sell? And who is going to help us navigate all of this without being hit with astronomical bills?

Butterfly had previously worked with a large international law firm. The work quality was high, but the billing model was tough to sustain. The founders wanted a firm that could operate at the same level of sophistication, but with more creativity, transparency, and alignment with startup realities.

That’s when Rubicon entered the picture.

The Challenge

Over the years, Butterfly would need to raise several rounds of convertible financing, manage a changing cap table, work through a founder transition, and eventually pursue a sale in a crowded and fast-moving market. Each step introduced new stakeholders and new sensitivities.

The company needed a legal partner who could keep the financing engine running, help the board and founders stay aligned, and ultimately steer everyone toward a thoughtful exit—not just fast.

Our Approach

Financing the Journey

Our first mandate was to help Butterfly secure capital on terms that worked for both the company and its investors. Instead of a one-size-fits-all structure, we worked with the founders and existing backers to design several rounds of convertible financing that met the moment.

Some were relatively straightforward notes or SAFE-style instruments. Others were more creative, with “pay-to-play–like” features designed to encourage continued participation from existing investors and protect the company if only some backers leaned in. At each step, we modeled how the instruments would convert in different exit scenarios and made sure the founder understood the tradeoffs clearly.

The result was a financing stack that kept the company moving forward without boxing it in.

Governance and a Founder Transition

As Butterfly matured, the leadership team evolved as well. One of the most sensitive chapters involved the departure of a founder. We worked with the board through the process, focusing on good governance, clear documentation, and preserving relationships wherever possible.

We helped structure and document the separation in a way that balanced fairness with the company’s long-term needs. It was the kind of work that doesn’t show up in a press release but matters enormously for culture, investor trust, and the company’s ability to move forward.

Along the way, we also supported Butterfly on key commercial partnerships, reviewing and negotiating agreements with enterprise customers and strategic partners so that business development never outpaced the legal foundation underneath it.

Planning for the Inevitable Exit

From relatively early on, everyone understood that Butterfly’s long-term path likely included a sale. That meant every financing decision and governance choice needed to keep an eventual transaction in mind.

We worked with the founders and board to establish a management carveout plan so that, if and when a sale happened, the people who had carried the company through the hard years could participate meaningfully in the upside. Getting that structure in place before a deal was on the table helped align incentives and reduce last-minute friction when negotiations began.

Over time, we negotiated three different letters of intent with potential acquirers. One transaction went all the way to closing before an internal leadership change at the buyer caused the deal to collapse. It was a gut punch for everyone involved, but it didn’t end the story. We helped Butterfly regroup, communicate with investors, and stay deal-ready for the next opportunity.

The Deal That Closed

When the right buyer emerged, the company was ready to move. From the day the letter of intent was signed to the day the transaction closed, only 26 days passed—a remarkably fast timeline for a deal of this complexity.

The transaction included an earnout component, implementation of the management carveout, and careful treatment of a cap table full of outstanding convertible notes. It also required coordinating parties and advisors spread across three continents and time zones, as well as negotiating employment and incentive arrangements for key members of the team.

We ran the legal process with urgency but not panic, translating the complex into the understandable so the founder could make decisions quickly and confidently.

Results

By the time the acquisition closed, Butterfly had:

• Raised multiple rounds of creative convertible financing that kept the company on track without sacrificing flexibility.

• Implemented a management carveout that recognized the work and risk taken by founders and key leaders.

• Navigated a founder's departure without derailing momentum.

• Closed a sophisticated cross-border sale on an expedited timeline.

Perhaps just as importantly, the relationship changed over time. We weren’t just outside counsel; we became close advisors and friends. We were in the foxhole together through near-miss deals, tough conversations, and the final sprint to closing.

For founders, the message is this: your path to an exit probably won’t be linear. When capital is tight, stakeholders are many, and timing is unpredictable, you want a firm that can be both inventive and steady. That’s the role we played for Butterfly AI—and the role we’re built to play for other founders.