What Is Co Founder Agreement

Equity is the most expensive asset for a business. Equal sharing is not a mandate, but it should be proportional to what the other person puts on the table – expertise, money, effort, resources, etc. We can`t talk about equity without talking about Vesting: if the co-founders were to receive their shares at the same time, there would be nothing more than half of them pressing the sleep button and letting you do the work. By creating a vesting calendar – often four years with monthly payments – you encourage everyone to earn a living. In addition, investors are waiting for a typical market vesting schedule and it would not be a good sign to have one. Any future agreement that requires a stake in the business concept and the technology and intellectual property associated with it must be transferred to a third party before the company is created before the creation of the company is agreed by each founder. In the case of such an agreement, the obligations arising from this cooperation agreement with the founders must be transferred to that third party. The last thing to keep in mind is not so beautiful — but it is important. And it is a non-competition clause or a confidentiality clause. These documents ensure that you and your co-founders cannot advise you on your competitors – or even become a competitor. It`s probably not something you want to think about in the heady beginnings of a startup, but it`s worth launching a plan, just in case.

Vesting is a way to protect them in such a situation. It is based on the term “sweat equity,” in which founders must take certain steps before being granted equity. Stock borrowing is often time-based, but can also be done as a result of certain milestones or events. An agreement is mainly reached at the time of creation in order to avoid any ambiguity that might arise in the company in the future. In addition, the expectations and objectives of all co-founders are defined by assigning each individual a specific role and responsibility for the improvement of the company. While one cannot predict every conceivable outcome, there must be a deep reflection and open discussion about how each founder sees that things are happening during the company, and in particular, what is happening should be one of the co-founders. Not quite. If you are considering starting a business with others, it is essential that you all have some time to discuss and develop a co-founder`s agreement. You can understand yourself perfectly at first, but as your business grows and develops, you may discover that you have differences about the future of your start-up or its mission. And if these differences occur while the company is working, it will only make the problems worse.

With step vesting, stock vests after reaching the milestones indicated. For example, if a non-technical co-founder partners with a technical co-founder, he or she could decide that the technical co-founder`s shares will be obtained on the basis of milestones such as 25% for sending a beta, 50% for sending v1 and the remaining 25% for sending V2.

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