Founder Agreement

A founder agreement records co-founders’ intended roles, initial ownership, vesting, decision process, intellectual-property commitments, expense treatment, and departure expectations before or alongside formation.

A useful document turns the parties' actual arrangement into measurable duties, approvals, timing, remedies, and a reliable execution record. Its terms should be reconciled to the transaction rather than copied from an unrelated form.

• Co-founders begin work before entity formation or financing
• The team needs to allocate initial equity and set vesting expectations
• Founders contribute different cash, intellectual property, time, or business opportunities

The document name alone does not determine the right structure. Consider a different instrument or qualified legal review when any of these conditions applies:

• Do not treat it as a substitute for actual equity issuance, board approval, securities compliance, tax elections, or IP assignments.
• Do not promise fixed ownership percentages without explaining dilution, option pools, vesting, and future financing.

Record exact facts before clauses are written. Names, authority, dates, amounts, defined terms, dependencies, and incorporated materials should be verifiable and consistent.

• Founders, proposed entity, roles, time commitments, and decision responsibilities
• Cash, inventions, code, domains, equipment, contacts, and other contributions
• Proposed equity, vesting commencement, cliffs, acceleration, and repurchase rights
• Expenses, salary timing, confidentiality, conflicts, departure, and dispute process

These decisions shape the allocation of responsibility and should not be left for boilerplate to decide:

• How contributions translate into initial ownership
• What vesting applies if a founder stops working
• Who may make commitments before formation
• Which ideas, code, domains, and other IP must be assigned to the company

• Business concept, roles, and time commitments
• Contributions, proposed ownership, and vesting
• Decision-making and pre-formation spending authority
• Confidentiality, inventions, and company opportunities
• Formation steps, founder departure, and superseding documents

Every provision should use the same parties, dates, standards, defined terms, and document hierarchy. A clause that is reasonable by itself can still create a conflict when it is not reconciled with payment, default, termination, or another exhibit.

1. 01Describe the intended result and the relationship in plain language.
2. 02Confirm parties, authority, governing jurisdiction, dates, money, property, services, and approvals.
3. 03Resolve the key decisions and identify every schedule, exhibit, disclosure, consent, or filing.
4. 04Draft the provisions as one consistent system, then review the complete execution set before signature.

An informal founder promise can conflict with later board-approved issuance, tax rules, or investor documents. Unearned equity and missing IP assignments become costly after value is created.

The main agreement may establish the framework while schedules, exhibits, disclosures, consents, or operational records supply transaction-specific details.

• Formation and capitalization plan
• Founder stock or unit purchase documents
• IP assignment and tax-election checklist

Each incorporated document should be identified precisely, use the same names and effective date, and follow a stated order of precedence if terms conflict.

Form the entity promptly, approve and issue equity, collect purchase price, execute IP assignments, make time-sensitive tax elections, and update the cap table rather than leaving terms only in the founder agreement.

• Confirm legal names, roles, capacity, addresses, and signing authority
• Reconcile dates, amounts, definitions, cross-references, schedules, and exhibits
• Confirm that duties, deadlines, approvals, acceptance standards, and payment triggers are measurable
• Check that default, termination, remedies, and surviving obligations work together
• Complete jurisdiction-specific forms, notices, witnesses, notarization, filings, or professional review when applicable
• Deliver and preserve the complete signed package with its incorporated documents

These sources provide federal, state-resource, regulatory, or institutional context. They do not replace checking the law and required forms applicable to the parties, transaction, and governing jurisdiction.

1. Source 1

   Launch your business

   U.S. Small Business Administration. Current SBA guidance on selecting a business structure and completing core launch steps.

2. Source 2

   Exempt Offerings

   U.S. Securities and Exchange Commission. Federal securities-law overview for private and exempt offerings.

3. Source 3

   Form 15620: Section 83(b) Election

   Internal Revenue Service. Current IRS form and instructions for the federal tax election covering certain substantially nonvested property.

4. Source 4

   New to intellectual property

   United States Patent and Trademark Office. Current official overview of patents, trademarks, copyrights, trade secrets, and ways to identify relevant protection.