3 Key Topics Before Drafting a Founders’ Agreement | IORIO LAW FIRM

“A well-drafted contract protects your business.
But an honest conversation protects your partnership.”
— Antonio Iorio, Elite Strategic Counsel

Elite Strategic Counsel Antonio Iorio explains the 3 crucial topics every founder must discuss before drafting a Founders’ Agreement. Avoid future conflicts.

Disagreements between co-founders are one of the main reasons startups fail.
Many entrepreneurs rush to sign a founders’ agreement at the very beginning — believing that legal formality alone can protect their partnership.

At IORIO LAW FIRM, I take the opposite approach.

Before you draft, you must talk.
Before you sign, you must align.

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A founders’ agreement is only as strong as the conversations that precede it.

Here are three essential discussions every founding team should have before a single clause is written.

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1. Alignment of Core Values

Startups often begin with enthusiasm, not structure. Two or more people share a vision — and believe passion will hold everything together. But passion fades when values diverge.

Ask yourself:

• Do you and your co-founders share the same vision of success?

• Is your motivation driven by impact, innovation, or wealth creation?

• How do you react to setbacks or conflict?

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At IORIO LAW FIRM, I’ve seen startups implode not for lack of capital, but because co-founders discovered too late that their ethical compass or tolerance for risk was incompatible.

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Why Values Matter More Than Vision

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Vision changes; values don’t.
If one founder values rapid scale and external investment, while another values independence and slow organic growth, conflict is inevitable.
Therefore, before you write a single line of a founders’ agreement, write down what you stand for — and what you will never compromise.

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2. Motivation and Long-Term Commitment

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A founders’ agreement is a commitment device.
It formalizes expectations about time, effort, and responsibility.
But if the underlying motivations differ, the best-written agreement will still collapse under pressure.

Ask yourself and your co-founder:

• Why do you want to launch this venture — now?

• Is this your life project or a strategic experiment?

• Would you stay committed if no profit came for two years?

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As a strategic legal counsel, I encourage founders to discuss even uncomfortable scenarios:

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• What happens if one partner receives another job offer?

• If personal obligations (family, health, relocation) arise, what are the exit options?

• Should the remaining founder have the right to buy back equity?

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These questions are not legal formalities — they are relationship tests.
Only after these topics are clear should you define equity distribution and vesting terms.

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3. Risk Tolerance and Exit Scenarios

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A strong founders’ agreement does not only define how to start, but how to end.
Different attitudes toward risk and exit strategies often destroy startups before they even mature.

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Scenario Analysis

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Discuss these points openly:

• What level of financial risk are you each willing to assume?

• If a major investor proposes acquisition, would you accept or resist?

• Would you prefer a long-term steady business or a quick high-return exit?

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In Italy, and particularly under civil law systems, the legal framework of founders’ agreements is contractually flexible— but only if the intentions of the parties are clearly defined.
Ambiguity breeds disputes; precision prevents them.

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At IORIO LAW FIRM, I often integrate “trigger clauses” within founders’ agreements — defining what happens if a founder departs, fails to meet targets, or breaches fiduciary duties.
These provisions turn potential chaos into predictable outcomes.

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Practical Framework Before Drafting

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Before you engage a lawyer, consider this checklist:

1. Shared Vision & Core Values

   • What are your top 3 cultural principles for your startup?

2. Commitment & Motivation

   • Are all founders dedicating equal time and resources?

3. Risk & Reward Strategy

   • What are your exit conditions and long-term ambitions?

Clarity on these points ensures that your legal structure reflects your strategic and personal alignment — not just a template downloaded online.

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The Legal Perspective: Why Timing Matters

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Creating a founders’ agreement too soon may freeze your flexibility.
Doing it too late may leave you legally unprotected.
The right moment is after the difficult conversations when expectations, values, and risk appetite have been tested and documented.

An agreement drafted at that stage isn’t just a formality:
it’s a strategic roadmap aligned with your business reality.

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In my experience advising founders and entrepreneurs across the USA, Italy and Europe, I’ve learned this: “A well-drafted contract protects your business. But an honest conversation protects your partnership.” Antonio Iorio, Elite Strategic Counsel

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At IORIO LAW FIRM, my approach to founders’ agreements integrates legal structure, corporate strategy, and preventive risk management, ensuring your startup is protected from both internal and external threats — before they arise.

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