Introduction

​

Formalizing your relationship as co-founders is critical for U.S. startups. A missing or poorly constructed founders’ agreement is one of the most common legal pitfalls, often leading to disputes or even failure.

This guide outlines the essential clauses you should include to ensure clarity, prevent conflicts, and safeguard both your company and partnership.

​

4 Pillars of a Founders’ Agreement

​

1. Roles & Responsibilities – Clearly define tasks, titles, and functional ownership.

2. Decision Rights & Equity – Establish authority, voting rights, and equity splits.

3. Commitments & Contributions – Include time, IP, financial contributions, and network access.

4. Contingency Planning – Cover vesting, founder departures, and future options.

 

Roles & Responsibilities

​

Even when founders have complementary skills, clearly defining roles prevents misunderstandings:

• Functional Leads: Assign operations, product, sales, or fundraising roles.

• Titles & Hierarchy: Agree on CEO, CTO, and other leadership positions.

• Periodic Review: Roles and responsibilities should be revisited every 6–12 months to reflect company growth.

​

 

Key Questions:
• What are the formal titles of each founder?
• Are responsibilities clearly documented?
• How will roles evolve as the startup scales?

​

Decision Rights & Equity

​

Decision-making authority and equity ownership are distinct issues.

• Decision Rights: Identify who approves major moves, hires, capital allocation, and fundraising. Include deadlock resolution methods.

• Equity Allocation: Base ownership percentages on contributions, not just titles. Avoid correlating equity with decision rights.

• Board Representation: Clarify who sits on the board and who has observer privileges.

 

 

Key Questions:
• Who has authority over specific decisions?
• How are conflicts resolved?
• Are equity and decision rights separated?

​

Commitments & Contributions

​

Commitments cover time, capital, intellectual property, and networks:

• Time Commitment: Specify full-time or part-time engagement.

• Intellectual Property: Ensure all company IP is properly assigned.

• Capital & Network Access: Record financial contributions and expectations for sharing professional networks.

• Confidentiality: Include NDA clauses to protect sensitive business information.

 

 

Key Questions:
• How many hours per week are expected from each founder?
• Are IP and financial contributions documented?
• Will networks be shared consistently?

​

Contingency Planning

​

Even a comprehensive agreement cannot predict every challenge. Include vesting schedules and exit strategies:

• Vesting Terms: Time-based or milestone-based, usually quarterly over 4 years with a 1-year cliff.

• Departure Scenarios: Decide how unvested shares are handled.

• Option Pool: Reserve equity for new hires or future grants.

• Acquisition & Sale: Establish procedures for company sale or founder buyouts.

 

 

Key Questions:
• What happens if a founder leaves voluntarily or is removed?
• How are unvested shares managed?
• How will future equity grants be handled?

​

Summary

​

A U.S. founders’ agreement is your legal and strategic roadmap. It should:

• Define roles, responsibilities, and decision-making authority.

• Separate equity ownership from control rights.

• Secure intellectual property and capital contributions.

• Include contingency plans for vesting, departures, and option pools.

​

 

“Draft carefully, document clearly, and revisit periodically.

Your founders’ agreement is the backbone of a resilient startup!”
Antonio Iorio