Founders Agreement


10

Can anyone recommend a place where I can download standard founders-agreement for a tech-startup? Preferably, it should include something about founders vesting (e.g. founders will become diluted if they quit the company during initial stages)

Thanks

Legal Founders Agreements

asked Jan 21 '10 at 18:59
Blank
Murkin
184 points

4 Answers


6

Elie makes an excellent point. SCORE can help you with this or you can go to Nolo to see what they have, at a reasonable price. If you want to go it alone, there are the critical things that should be in a founders agreement:

  • Business Definition: Defining the potential venture is an important piece of any agreement. Describe it in as much detail as necessary.
  • Roles and Responsibilities: If there are certain roles and responsibilities that each partner needs to perform, then put those in. It could be as simple as Joe runs the business while Jane is the silent partner. This specific topic can be a real source of conflict since assumptions about control usually turn ugly. Don’t be shy about dealing with this. You are starting a business and roles need to be clearly defined.
  • Initial Funds: Usually, some sort of start up funds are required. You should write down who put it in what. Payback preferences should be put in as well. For example, if Jane put $10k in the business then it should be stated how she gets paid back. Another good idea is to put in reimbursement methods for business related expenses.
  • Assets Contributed: Any kind of tangle asset that has been contributed or will be contributed should be listed. That way, it is clear who owned what before the venture.
  • Ownership Assumptions: Along with who does what there should be some mention of the ownership. Usually, this is a percentage or maybe a certain number of shares in the company. You can also detail a vesting schedule or a trigger that says people lose their stock if they leave before a certain milestone.
  • Milestones: Describe the milestones that need to be met along with the work required to be completed. This way, you know when you are ready for the next step.
  • Conflict Resolution: In the event things go wrong, how will any conflicts get resolved. This could be as simple as binding arbitration or a neural third party that everyone trusts.
answered Jan 22 '10 at 00:08
Blank
Jarie Bolander
11,421 points
  • @Jarie - Very informative. This kind of layout can serve as both a project plan AND the template of a founders agreement (at least for me). I like it. – Eric Amzalag 9 years ago
  • Thanks. I have found that it's always a good idea to write down what your expectations are. This just makes it crystal clear what the deal is and who does what. – Jarie Bolander 9 years ago

4

You can try SCORE, or you can just write your own - that's what I did, and it's more useful if you aren't going to be using a lawyer to help you.

answered Jan 21 '10 at 23:51
Blank
Elie
4,692 points

1

This one has a great deal of information but it's a bit hard to read for a start-up noob:

http://blog.simeonov.com/2010/02/22/startup-founder-agreements/

answered Aug 31 '11 at 20:40
Blank
Nosuic
118 points

0

Jarie's answer is a good summary of things to consider. I think what you are referring to (given your request for "vesting language"), however, is a Founder Stock Purchase Agreement which applies to a corporation. The alternative is to have both a Stock Purchase Agreement and a Founder's Agreement. The former is slightly more common. If you decide to form an LLC with partners, you should all of the follow as well but you put it in the company's operating agreement.

Here are several factors that you should always consider in a startup founder's stock purchase agreement:

  1. Ownership - What are you purchasing your ownership with and how much
  2. Restrictions on ownership transfers - You only want original founders (with some exceptions) to own the founders stock
  3. Vesting - If a founder leaves early, how much ownership do they not get
  4. Investment Representations - The founder understands the nature of the business such that he is knowledgable to invest his own money (only for corporations).
  5. Employment Implications - The agreement is no guarantee of employment at the company

Some good founder stock purchase agreement templates for a DE corporation I have found thus far. Please go over these with a lawyer.

  1. UpCounsel - legal startup - Founder Stock Purchase Agreement 1
  2. Orrick - established SV law firm - Founder Stock Purchase Agreement 2
I am not affiliates with either entity. I have heard of Orrick but have never heard of UpCounsel.
answered May 11 '12 at 15:48
Blank
User17866
21 points

Your Answer

  • Bold
  • Italic
  • • Bullets
  • 1. Numbers
  • Quote
Not the answer you're looking for? Ask your own question or browse other questions in these topics:

Legal Founders Agreements