Founders' Agreement

Also called Founder Agreement

A contract among co-founders setting out equity splits, roles, decision-making, vesting, and what happens if someone leaves. The prenup of a startup.

Why it matters

Founder disputes are one of the top killers of startups, and a clear agreement made early, while everyone is friendly, prevents ugly fights later. Skipping it to avoid an awkward conversation is a classic, costly mistake.

For example

Before writing code, three co-founders sign an agreement setting equity at 40-40-20, four-year vesting, and what happens if one leaves early.

Worth your time

Founders' Agreement: Definition, Key Clauses, and Template for Indian Startups EquityList · article The single clearest explanation of the two documents Indian founders confuse: the founders' agreement (equity, vesting, roles, IP, departure, signed at or before incorporation) versus the shareholders' agreement (investor voting rights, drag/tag, reserved matters, signed at your raise). It nails the timing rule that trips people up: sign before shares are issued, because you cannot bolt vesting onto already-issued shares without every founder consenting. It is blunt that IP a founder built before incorporation belongs to that founder personally until a formal IP Assignment moves it to the company, which is exactly what breaks a diligence during your first term sheet. Open equitylist.co →

Related terms

Go deeper

See how founders actually handle this on Co-founders, team and legal, part of the Starting Up hub.

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