Founders agreement

What it is and when it is used

A founders agreement is signed by the co-founders of a new venture, usually before or shortly after the company is formed. It records the equity each founder receives, how that equity vests, the founders' roles and time commitment, the assignment of intellectual property to the company and the terms on which a founder may leave. It also commits the founders to form the company, sets the rules on capital contributions, confidentiality and expenses, and states that the agreement does not create a partnership between them.

Who signs it and in which role

The agreement is signed by two individuals, Founder A and Founder B, together "the Founders". Both sign in the same capacity, but the negotiation options show how each choice affects each founder, because their interests can differ (for example, a founder who will be chief executive and a founder who will join later).

Key clauses

Equity split

Equal split, a contribution-based split set out in a schedule, or a dynamic split tracked over time and fixed at a qualified financing, after twelve months or by agreement.

Vesting and acceleration

Vesting options range from the four-year schedule with a one-year cliff to immediate vesting. Acceleration can be none, double-trigger, single-trigger or partial (50% on a sale, the rest on termination within twelve months).

Time commitment

Full-time from day one, a transition to full-time within three to six months (with a minimum of 20 hours a week before then), or part-time with non-competing outside work allowed.

Intellectual property

Full assignment of all business-related work, assignment of new work with prior IP licensed to the company, or a narrow assignment limited to company time and resources.

Decisions and roles

Major decisions can need unanimity, a two-thirds supermajority, a simple majority, or fall to the chief executive with reserved matters. Roles can be defined titles, equal co-founders with no chief executive yet, or functional areas.

Departure, non-compete and disputes

Departure terms, a non-compete (none, during involvement only, or twelve months after departure) and a dispute route (mediation then arbitration, arbitration, courts, or an advisory board first).

What the two sides usually negotiate

The template treats the equity split, the time commitment, roles and the dispute route as neutral choices. The points of tension are elsewhere:

• Vesting: a backloaded schedule favours Founder A, a shorter three-year schedule favours Founder B. The four-year schedule with a one-year cliff is the middle ground.
• Acceleration: no acceleration favours Founder A, single-trigger favours Founder B. Double-trigger is the balanced position.
• Intellectual property: full assignment favours Founder A, narrow assignment favours Founder B. Assigning new work while licensing prior IP to the company sits in the middle.
• Decision making: chief executive authority and simple majority favour Founder A. Unanimity on major decisions is the balanced option.
• Departure: good leaver and bad leaver terms favour Founder A. Keeping vested shares and forfeiting unvested ones is the middle ground.

When the founders choose different options, Dealroom proposes these balanced positions, weighted by how firmly each side holds its view.

Jurisdictions and languages Dealroom supports for it

Dealroom drafts this agreement under the law of California, England and Wales or Spain, in English or Spanish. Each jurisdiction adds its own provisions: for California, governing law, courts in San Francisco County, the limits on non-competes under section 16600 and a jury trial waiver; for England and Wales, the reasonableness of restrictive covenants and the fraud carve-out; for Spain, the Ley de Sociedades de Capital, the courts of the company's registered office, employment-law limits on non-competes and the principle of good faith. The current catalogue entry also mentions guidance on the US section 83(b) election for reverse vesting. For Spanish limited companies, see also the Spanish shareholders' agreement.

Common mistakes

• Splitting equally by default. The skill notes that equal splits can cause problems if contributions later become unequal; the split should reflect expected contributions, not only past work.
• Skipping vesting. Without vesting there is no protection if a co-founder leaves, and investors will likely require it later.
• Leaving IP unassigned. Without a clear assignment, a founder could claim the code or inventions, which matters at fundraising and acquisition.
• No clear decision rules. Unanimity on everything carries a real deadlock risk.
• Relying on a non-compete in California. Post-departure restrictions are void there.
• Part-time commitments with no plan. Investors expect full-time commitment at funding.

# 1. Read the clauses, options and the facts it needs
curl https://dealroom.todo.law/api/v1/agent/templates/FOUNDERS \
  -H "Authorization: Bearer drk_YOUR_KEY"

# 2. Create the contract (clauses you leave out take the default option)
curl -X POST https://dealroom.todo.law/api/v1/agent/deals \
  -H "Authorization: Bearer drk_YOUR_KEY" \
  -H "Content-Type: application/json" \
  -H "Idempotency-Key: $(uuidgen)" \
  -d '{
    "schema": "dealroom.solo-intake/1",
    "contractType": "FOUNDERS",
    "governingLaw": "ENGLAND_WALES",
    "language": "en",
    "dealName": "Example FOUNDERS",
    "selectionPolicy": "defaults"
  }'