Team, Co-founders & Legal

How do I bring on a co-founder who's still at a job or in college without getting burned?

A starting point

Do the paperwork before they touch the codebase. Someone employed elsewhere may have an employment contract that claims IP they build on the side, so have them assign all project IP to your company in writing from day one, and check their notice period and any non-compete. Give them a cliff so a few months of moonlighting doesn't earn permanent equity. Set an explicit date by which they quit and go full-time, and treat missing that date as a real decision point, not something you keep postponing.

Go deeper

Hand-picked from around the web, each with a note on why it earns your time.

3 resources 3 link-checked Read Use

Read

📄 Article
✓ Link checked India Free Advanced

Why we picked it Written by one of India's top corporate law firms, this is the authoritative read on what your co-founder's current employer can actually enforce while they are still on the payroll. It confirms that a non-compete or exclusivity clause operative during employment is valid in India (unlike a post-exit non-compete, which Section 27 of the Contract Act voids), which is exactly why you check their contract before they touch your codebase, not after they quit.

Moonlighting: Legal Considerations and Contractual Regulation

From India Corporate Law (Cyril Amarchand Mangaldas) by Cyril Amarchand Mangaldas 12 min read

  • Dual employment is permissible in India only when the contract allows it or the employer consents, so a co-founder's existing employment agreement may bar the side work outright
  • Non-compete and exclusivity clauses that operate during the term of employment are enforceable, and firms draft them to cover consultancy and advisory arrangements, not just formal jobs
  • Employers can and do clarify how IP created for another entity is treated, especially where office time or resources touch the side project, making the employer's IP claim a live risk
Open corporate.cyrilamarchandblogs.com →
📄 Article
✓ Link checked Free Beginner

Why we picked it A tight, practical checklist for the still-employed co-founder before they write a line of code for you: read the employment agreement's invention-assignment and non-compete clauses first, get a written waiver where advisable, and build only on personal time and personal equipment so the day-job employer has no hook. It is the concrete hygiene that keeps a future acquirer's diligence from stalling on who really owns the early work.

Moonlighting a Side Project While Employed Full-Time: Here Are the Dos and Don'ts

From Startup Grind by Startup Grind 8 min read

  • Read the invention-assignment clause before starting, because it can hand your co-founder's employer ownership of IP they build on the side
  • Use only your own time, your own laptop, and none of the employer's confidential information, and never work on the side project on the employer's clock
  • When the contract is ambiguous or a non-compete is in play, get a written waiver or release from the employer rather than assuming you are clear
Open startupgrind.com →

Use

📋 Template
✓ Link checked India Free Beginner

Why we picked it This is the checklist and the template in one, written for Indian Pvt Ltd reality, not a US Delaware copy-paste. It walks all nine load-bearing clauses (equity split, 4-year vest with 1-year cliff, good/bad leaver buy-back, roles, reserved matters and deadlock, IP assignment of pre-incorporation work, exit, dispute resolution) and gives a 16-clause template skeleton. Two India-specific traps it flags will save you a real fight: post-exit non-competes are void under Section 27 of the Contract Act, and any share-related term only binds the company once it is mirrored into your Articles of Association (per V.B. Rangaraj v. V.B. Gopalakrishnan).

Co-Founder Agreement for Indian Startups: Clauses and Template (2026)

From iPleaders by iPleaders 25 min read

  • Nine essential clauses plus a full template skeleton you can adapt: equity, vesting, leaver mechanics, roles, deadlock, IP, confidentiality, exit, arbitration
  • Post-termination non-compete clauses are unenforceable in India under Section 27, so lean on in-term restrictions and non-solicit instead
  • Vesting and buy-back terms bind the company only when written into the Articles of Association, not just the founders' side letter
Open blog.ipleaders.in →

People also ask

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