Introduction

What’s riskier than launching a startup? Launching one without a Founders’ Agreement. Founders often tell me: “We’re friends. We trust each other. We agree on everything.” That’s wonderful—and completely irrelevant in the eyes of the law.

When things are good, you don’t feel the need for structure. When things get complicated, you realize structure was the only thing that could save the company.

A Founders’ Agreement isn’t paperwork. It’s a roadmap. It defines how your startup works, who owns what, and what happens if the team breaks up—which happens more often than founders expect.

What Could Go Wrong Without a Founders’ Agreement?

1) A Founder Leaves — Do They Take Half the Company?

If there’s no vesting schedule, a founder who leaves after six months could still legally own 30%, 40%, or even 50% of the company. Good luck raising money with that on your cap table.

Investors hate:

  • Dead equity
  • Missing vesting
  • Unclear ownership
  • Founders who left but still control a large portion of the company

A Founders’ Agreement fixes all of this.

2) Who Owns the Startup’s IP?

I’ve seen startups reach investor due diligence only to realize that code, design, or product created by a founder was never assigned to the company.

If the startup doesn’t own its IP, it doesn’t own its product. And if it doesn’t own its product, there is no company.

  • All IP is assigned to the company
  • Founders can’t claim ownership after leaving
  • The company controls technology, branding, and core assets

3) Decision-Making Becomes a Battle

What happens when founders disagree? Who has the final say? Majority or unanimity? Board approval? Without clear rules, you get endless debates, frozen development, confused teams, and missed opportunities.

A Founders’ Agreement provides a decision-making framework so the company keeps moving even when people disagree.

4) Roles & Responsibilities Become Vague

“We’re all doing everything” works early—until resentment builds and founders feel others aren’t doing enough. Clear responsibilities reduce friction and conflict.

What a Good Founders’ Agreement Should Include

  • Equity split
  • Vesting schedule
  • Roles and responsibilities
  • Decision-making process
  • IP assignment
  • Founder departure scenarios

Conclusion

A Founders’ Agreement is not about predicting problems—it’s about preventing them. It protects the company, and it protects the founders.

If you want your startup to grow smoothly, with clean ownership, clear roles, and fewer surprises, get your Founders’ Agreement in place before someone asks: “So… what happens if one of us leaves?”

If you want help getting started or reviewing an agreement, I’m happy to help.

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