Create a Founders Agreement Before You Build
The most important document for your startup. Define equity splits, vesting schedules, and exit terms with your co-founders before writing a single line of code.
Starting at $10 during beta.
Why Every Startup Needs a Founders Agreement
65% of startups fail due to co-founder conflict. A founders agreement prevents the most common disputes before they happen.
Without a founders agreement, you risk:
- -Expensive lawsuits over equity disputes
- -Co-founder walks away with 50% after one month of work
- -No clear way to remove an underperforming founder
- -IP ownership disputed when raising funding
- -Decision deadlock with no resolution mechanism
- -Investors walk away due to unclear founder terms
Key Provisions Your Agreement Needs
Equity Split & Vesting
Define ownership percentages with 4-year vesting and 1-year cliff to protect everyone
Roles & Responsibilities
Clarify who handles what so there are no surprises as you scale
IP Assignment
Ensure all intellectual property belongs to the company, not individual founders
Decision Making
Establish voting rights and how major decisions get made
Departure Provisions
What happens to equity if a founder leaves, including buyback terms
Non-Compete & Non-Solicit
Protect the company from founders competing or poaching employees
Dispute Resolution
Agree upfront how you will resolve disagreements without litigation
Commitment Levels
Define full-time expectations, salary deferrals, and outside activities
How to Create Your Founders Agreement
Describe Your Startup
Tell us about your founders, their roles, equity expectations, and any special circumstances.
AI Agents Draft & Review
Three AI agents collaborate: one drafts, one critiques for fairness, one validates completeness.
Review & Sign
Export your agreement, review with your co-founders, and get it signed before you build.
What is Included in Your Founders Agreement
Equity Ownership Table
Clear percentage breakdown for each founder
Vesting Schedule (4-Year with Cliff)
Industry-standard vesting to protect all founders
Roles & Responsibilities
Who handles what: CEO, CTO, product, sales, etc.
IP Assignment Clause
All work product assigned to the company
Decision Making Framework
Voting rights and approval thresholds
Departure & Buyback Terms
What happens if a founder leaves voluntarily or involuntarily
Non-Compete & Non-Solicitation
Reasonable restrictions to protect the company
Confidentiality Obligations
Protection for proprietary information
Dispute Resolution
Mediation and arbitration procedures
Signature Blocks
Ready for all founders to sign and date
Frequently Asked Questions
When do I need a founders agreement?
You need a founders agreement as soon as you decide to start a business with one or more co-founders. Ideally, sign it before writing any code, investing money, or incorporating. The earlier you establish terms, the fewer disputes you will face later.
What is a vesting schedule?
A vesting schedule determines when founders earn their equity over time. The standard is 4-year vesting with a 1-year cliff, meaning you earn 25% after one year and the remaining 75% monthly over the next 3 years. This protects the company if a founder leaves early.
What happens if a co-founder leaves?
A founders agreement should specify buyback provisions for unvested shares. Typically, if a founder leaves before full vesting, the company can repurchase unvested shares at the original price or fair market value. Some agreements also include "good leaver" vs "bad leaver" provisions with different terms.
Should a founders agreement be done before incorporating?
Yes, ideally you should have a founders agreement before incorporating. However, you can still create one after incorporation. What matters is establishing clear terms as early as possible. The agreement can be updated when you incorporate to reflect the new corporate structure.
What is the cliff in vesting?
The cliff is a waiting period before any equity vests. A 1-year cliff means no equity vests until the founder has been with the company for 12 months. If they leave before the cliff, they get nothing. After the cliff, the first portion (usually 25%) vests immediately, then the rest vests monthly or quarterly.
Is this founders agreement ready to sign?
Pactlio generates professional contract drafts using AI. While our agreements follow standard legal formats, we strongly recommend having your founders agreement reviewed by a licensed attorney before signing given its importance to your startup. We provide drafts, not legal advice.
Ready to Protect Your Partnership?
Create a founders agreement before you build. Prevent disputes, protect equity, and focus on what matters. Starting at $10 during beta.
Create Your AgreementStarting at $10 during beta. Takes less than 2 minutes.