Why Co-founders Need an Agreement
Many startup disputes begin between co-founders – over equity, roles, commitment or what happens when someone leaves. A founders’ agreement settles these questions early, while everyone is aligned.
It covers how equity is split and vested, who does what, how decisions are made, who owns the intellectual property, and how exits are handled. Investors also look for these arrangements during due diligence.
Clear rules between co-founders from day one
- Equity, vesting and roles agreed in writing
- IP owned by the company, not individuals
- Fair exit and buy-back terms
Who Needs a Founders’ Agreement?
- Startups with two or more co-founders
- Founders about to incorporate a company
- Teams preparing for their first investment
- Founders bringing in a new co-founder
Benefits
Fewer disputes
Expectations on equity and roles are written down.
Vesting protects the company
Equity is earned over time, protecting remaining founders.
IP stays with the company
Code, designs and brands belong to the business.
Investor-ready
Clean founder arrangements make due diligence easier.
Documents Required
- Names and roles of co-founders
- Proposed equity split
- Vesting preferences
- Details of IP each founder has created
- Company details (if already incorporated)
Drafting Process
Founder discussion
We help you discuss and agree the key terms.
Draft the agreement
Equity, vesting, roles, IP and exit clauses drafted.
Review with all founders
Every founder understands and agrees to the terms.
Align company documents
Articles and shareholder records updated where needed.
Common Mistakes to Avoid
Co-founder disputes often stem from these missing terms.
- Equal split without thought – An equal split may not reflect contribution and commitment.
- No vesting – Without vesting, a departing founder keeps all their equity.
- IP not assigned – Work created before incorporation must be assigned to the company.
- Undefined roles – Clarify responsibilities and decision rights.
- No exit mechanism – Set out buy-back and valuation terms upfront.
After Signing
Incorporate and align
Reflect key terms in the Articles and shareholders’ agreement.
Assign IP
Execute IP assignment to the company.
Issue shares
Issue founder shares in line with the agreement.
Revisit when raising funds
Update terms before the first investment.
Why Choose Vaidam Consultancy for Founders’ Agreement
Startup experience
We know what investors expect to see.
Clear quote upfront
You receive our fee and any official fees before we start.
Enforceable drafting
Clauses are drafted to work within Indian contract law.
Plain-language advice
Every step and risk is explained in simple terms.
Frequently Asked Questions
Vesting means founders earn their shares over a period, often four years with a one-year cliff, so a founder who leaves early does not keep all their equity.
Ideally yes, and then reflected in the company’s Articles and shareholders’ agreement after incorporation.
Restrictions that apply after a founder leaves are generally limited under Indian contract law. We focus on enforceable protections such as confidentiality and IP assignment.
A founders’ agreement covers the co-founders’ relationship and roles; a shareholders’ agreement governs all shareholders, including investors.
A cliff is an initial period, often one year, before any shares vest.
Yes. Agreements can accelerate vesting on events such as an acquisition.