Company and investment
Founders' agreement
The paper founders write for each other, ideally before there is anything to argue about. It records the equity split, what each person is committing to in time and money, who decides what, who owns the intellectual property created so far, and — the section that earns the document — what happens when one founder leaves. Once a company exists, much of this migrates into constitutional documents and a shareholders' agreement, but it starts here.
- In the catalogue
- Company and investment
- Where it can live
- Any of the 184 governing laws
Who uses one
- Two or more people starting a business together.
- Founding teams who have been working on trust and want it written down.
- Anyone joining an existing founding team part way through.
What you are deciding
- The equity split, and how it was reached
- Whether equity vests, over what period, and from what date
- What each founder is committing: time, money, or both
- Roles, titles, and who decides what
- How disagreements are settled
- Who owns work created before the company existed
- What happens if a founder leaves, is asked to leave, or stops showing up
- What happens to equity on an exit or a sale
Blanks you leave stay blank and wait in the room. Nothing is filled in from a guess.
The sections a draft usually has
- 1The founders and the business
- 2Equity split
- 3Vesting and cliff
- 4Roles and commitments
- 5Decision making
- 6Intellectual property
- 7Leaver provisions
- 8Confidentiality
- 9Dispute resolution
A general outline, not a required one. What turns up in a draft follows what you described. A contract is written in the order a contract is read.
What people call it
The names this kind of paper goes by. They are here because people search for them. They also filter the catalogue. They are not a wordlist the door matches. At the composer you describe the deal in your own words instead.
- founders agreement
- co founder agreement
- founder collaboration agreement
- startup founders contract
- equity split agreement
- founders pact
Questions people ask
- Is a founders' agreement the same as a shareholders' agreement?
- Not quite. A founders' agreement often predates the company and covers commitments between people; a shareholders' agreement governs the company once shares exist. Many teams sign one and then the other.
- Why do founders vest their own shares?
- Because vesting is what stops a founder who leaves early keeping a full stake. It is a commercial arrangement between the founders, and investors commonly expect to see one.
- What are good leaver and bad leaver terms?
- Labels for how somebody departing is treated: usually whether they keep vested shares and at what price. What counts as each is defined in the paper rather than by law.
General answers about the document. Not advice about your situation. Not written about any one country.
Where it lives
A contract names the legal system it is governed by. That is a separate decision from which paper it is. You pick it at the door, from any of the 184 units in Governing law, including England and Wales, Delaware, California and New York.
You do not start from this page. Describe the deal in one sentence at the door. Read the draft back in plain language, in the order a contract is read.
Start it at the door →Related kinds