Founder Agreement Basics

Equal splits are easy to agree on and hard to change. Unequal splits that reflect contribution, capital, and commitment often age better, but they need to be discussed early, in writing, with a clear rationale.

Vesting protects the company and the founders who stay. A standard pattern is four-year vesting with a one-year cliff, with acceleration on a change of control and on termination without cause. Without vesting, a founder who leaves in year one keeps the equity that the remaining founders spend years defending.

Who is CEO, who signs contracts, who hires, who fires? Decision rights should be documented at the founder level and reflected in the corporate records. Informal authority becomes a source of conflict when the stakes change.

Every founder, employee, and contractor should assign IP to the company in writing, with an express waiver of moral rights where applicable. Early-stage IP risk is often cleaned up during diligence, at cost.

What happens if a founder wants to leave? What happens if founders cannot agree on a fundamental decision? A shareholder agreement sets out buy-sell rights, drag-along and tag-along rights, and deadlock resolution. Each should be discussed while the relationship is good.