Do I need employment contracts and IP assignment from my co-founders and first employees, or is a handshake fine?
The short answer
A handshake means your co-founder can legally walk with a chunk of the IP and equity, so never operate on trust alone here. Every founder and employee needs a written agreement assigning all work product to the company plus vesting on founder equity, signed before serious building starts. This is the single most common gap that kills Indian startups at diligence, so close it early and cheaply.
Go deeper, your way
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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 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
Why we picked it
This is a ready-to-fill IP assignment and confidentiality agreement hosted on the government's own Startup India portal, so it is drafted for Indian law and free to use. It gives a non-lawyer the actual assignment and confidentiality language to adapt for a developer and get signed. Treat it as a starting point: it is written employer to employee, so swap the party labels for a contractor engagement and, ideally, have a lawyer glance at the final version.
