Team, Co-founders & Legal

What is a founders' agreement and what must it actually cover?

A starting point

It's the contract between you and your co-founders that decides what happens when things get hard, written while you still like each other. Non-negotiables: equity split and vesting, roles and decision rights, IP assignment (everyone's work belongs to the company), what happens if someone leaves or is fired, and how you resolve a deadlock. A handshake between friends is how founder disputes become fatal. Sign this before you write serious code or take a rupee of outside money.

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 Beginner

Why we picked it 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.

Founders' Agreement: Definition, Key Clauses, and Template for Indian Startups

From EquityList by EquityList 15 min read

  • Founders' agreement governs the co-founder relationship; the shareholders' agreement layers in investor protections later, they are not the same document
  • Sign at or before incorporation and always before shares are issued, or vesting cannot be applied retroactively
  • Pre-incorporation IP stays with the individual founder until a formal IP Assignment Agreement transfers it to the company
Open equitylist.co →
📄 Article
✓ Link checked Free Beginner

Why we picked it Concrete proof that the absence of a written agreement is what turns a friendship into a lawsuit. The Zipcar story (a casual 50/50 handshake with no documented expectations, ending in one founder firing the other after 18 months of resentment) and the anonymous 'Tom and James' story (no governance in place, a co-founder drained funds and pushed the company into insolvency, and Tom lost his life savings) are the exact scenarios a 3-page document prevents. Read this before you tell yourself you and your co-founder are too good friends to need paperwork.

Startup horror stories: when co-founders fall out

From Vestd by Vestd 12 min read

  • A handshake 50/50 with no documented commitment expectations is what caused the Zipcar founder fallout, not the split itself
  • Missing corporate governance let one founder withdraw funds disproportionately and sink the company, wiping out the other's savings
  • Every dispute here was avoidable with terms written down before the trouble started, which is the whole argument for signing early
Open vestd.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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