Founders Agreement
A contract among the co-founders of a startup defining each founder's equity, vesting, roles, decision-making rights, and what happens if a founder leaves.
What it means
A founders agreement is the first internal contract among a startup's founding team. It allocates equity ownership, sets vesting schedules (typically four years with a one-year cliff), assigns roles and IP, defines decision-making thresholds, and specifies departure mechanics — restricted-stock buyback rights and good-leaver/bad-leaver provisions. Without one, founder disputes can derail the company and trigger expensive litigation in the first 18 months.
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