Founders Agreement FAQ

A founders agreement is a contract between co-founders that establishes each person equity ownership, roles, responsibilities, vesting schedule, IP assignment, decision-making process, and what happens if a founder leaves. It is one of the most important documents for any startup.

As early as possible — ideally before any significant work begins. The longer you wait, the more complicated it becomes (who owns what IP, how to value contributions). Many startup disputes arise from not having a founders agreement from the start.

Yes. Even equal partners need to address vesting, decision deadlock, departure scenarios, IP ownership, and financial commitments. Without an agreement, disputes can destroy the company. A 50/50 split without deadlock provisions is especially risky.

There is no single right answer. Consider: who had the original idea, who is contributing full-time vs part-time, relevant expertise and industry connections, financial investment, and ongoing commitment. Many advisors recommend against equal splits — instead, have an honest conversation about relative contributions.

Vesting means equity is earned over time rather than granted immediately. The standard startup vesting schedule is 4 years with a 1-year cliff: no equity vests in the first year, then 25% vests at the one-year mark, with the remainder vesting monthly over the next 3 years.

Vesting protects all founders. Without it, a co-founder could leave after two months and keep their full equity stake while contributing nothing further. Vesting ensures equity is earned through ongoing commitment. Even founders should vest their shares.