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Founders’ Agreement Template
Specify roles, equity division, and responsibilities among startup founders using this Founders’ Agreement Template.
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Founders’ Agreement Template
This Founders’ Agreement is entered into on [Date], by and between the following individuals (collectively, the “Founders”):
• Founder A: [Name, Address]
• Founder B: [Name, Address]
(Include more Founders as needed.)
1. Purpose and Business Concept
The Founders agree to collaborate on forming a business entity (the “Company”) under the working name [Name of Venture]. The purpose of this Agreement is to outline the rights and responsibilities of each Founder prior to formal incorporation.
2. Ownership and Equity Allocation
2.1. Initial Ownership
Founder A shall own [Percentage]% equity, Founder B shall own [Percentage]%, etc.
2.2. Vesting Schedule (If Applicable)
Equity might vest over [X years] to ensure commitment. Outline conditions for partial or accelerated vesting.
3. Roles and Responsibilities
• Founder A: [Role/Title, e.g., CEO, CTO]
• Founder B: [Role/Title, e.g., COO, CFO]
Describe each Founder’s primary duties and decision-making authority.
4. Capital Contributions
Detail the initial contributions in cash, services, or intellectual property. State how they affect ownership (if at all).
5. Confidentiality and IP
All intellectual property created in relation to the business belongs to the Company. Each Founder must maintain confidentiality of any proprietary information.
6. Decision Making and Dispute Resolution
• Voting: Outline how major decisions are made (majority vote, unanimous, or based on equity).
• Deadlock: Provide a mechanism to resolve disputes if the Founders cannot agree.
7. Termination or Founder Exit
Define what happens if a Founder resigns, is removed for cause, or passes away. Include buyback provisions or the right of the Company/founders to purchase that equity.
8. Formal Incorporation
The Founders intend to incorporate the Company under the laws of [State], with appropriate formation documents. This Agreement remains in effect until superseded by official corporate bylaws or shareholder agreements.
9. Governing Law
This Agreement is governed by the laws of [State]. Any dispute shall be resolved in the courts of [City, State], unless otherwise agreed.
10. Signatures
Founder A: _______________________ Date: ______________
Founder B: _______________________ Date: ______________
(Include additional signatures if more founders are involved.)
Details
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Founders’ Agreement Template
FOUNDERS’ AGREEMENT FAQ
What is a founders’ agreement?
A founders’ agreement is a legal document that defines the relationship between the co-founders of a new business. It details ownership shares, roles, responsibilities, decision-making processes, and other key terms that guide how the company will be run from inception.
Why do you need a founders’ agreement?
It provides clarity on each founder’s equity, duties, authority, and expectations, helping to prevent conflicts and misunderstandings as the business grows. A well-drafted agreement also serves as a reference point for resolving disputes and protecting each founder’s interests.
When should I use a founders’ agreement?
You should draft a founders’ agreement as early as possible—ideally during the formation of the business. Establishing clear terms at the outset helps avoid complications later, especially when raising funds, onboarding new partners, or navigating major business changes.
How to write a founders’ agreement?
Include ownership percentages, capital contributions, defined roles, voting rights, vesting schedules, dispute resolution processes, and exit provisions. Ensure all founders review the terms thoroughly, seek legal advice if needed, and sign the agreement to make it binding.
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