What to Include in a Founders Agreement — But You Probably Aren’t
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All the non-legal provisions you should put in your agreement to keep your startup team high-performing.
Starting a business is exciting.
Especially so if you’re teaming up with people you’re excited to work with.
After you and your co-founders have decided on titles, duties, and responsibilities, don’t forget the key legal document that’ll formally outline your relationship: a founder’s agreement.
Why should you create one?
When the initial optimism and high from starting a business wears off, your founder’s agreement can provide clarity to a number of problems that I see as a mediator and executive coach working with seed-funded to Series B startup teams.
💡 Harvard Business School Professor Noam Wasserman found that 65% of high-potential startups fail because of conflict among co-founders.
When disagreements between co-founders occur, usually it’s around decision-making, who does what and when, differences in working styles, and interpersonal or personality clashes.
A lawyer, when creating your founder agreement, should, at a minimum, include:
• Each founder’s roles and responsibilities
• The amount of equity each person gets
• The cap table & vesting schedule
• What happens if someone is fired, dies, or wants to leave (exit clauses)
• Salaries (if applicable)
• Intellectual Property
These sections, however, do little to address and manage the people aspect of working together.
This article will walk you through the various non-legal components that you should also consider when writing up your founder agreement, optimizing collaboration between you and your co-founders so the team stays high-performing for the long run.
Key Takeaways
- Getting clear on the non-legal provisions that keep founder teams high-performing
- Why writing down the reason why the founders…
