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Which Item(S) Should Be Included in a Founder Agreement

As a startup founder, it`s important to have a clear and thorough agreement with your co-founders to avoid disputes and ensure everyone`s interests are protected. A founder agreement is a legal document that outlines the terms and conditions of the partnership between the founders, including ownership, responsibilities, and compensation. When drafting a founder agreement, there are certain items that should be included to ensure it is effective and comprehensive.

1. Purpose and Goals

The founder agreement should clearly state the purpose and goals of the business. This includes the type of business, the target market, and the intended outcomes. This will help ensure that everyone is on the same page and working towards the same objectives.

2. Equity Split

One of the most important aspects of a founder agreement is the equity split. This outlines how ownership of the company will be divided among the founders. It`s important to establish a fair and equitable split based on each founder`s contribution to the business, skills, and experience.

3. Roles and Responsibilities

The agreement should clearly define the roles and responsibilities of each founder. This includes who will be responsible for operations, marketing, finance, and other key areas of the business. This will help ensure that everyone is clear on their responsibilities and that there is no overlap or confusion.

4. Decision-Making

The founder agreement should also establish how decisions will be made within the company. This includes the process for making decisions, who has the final say, and how conflicts will be resolved. Having a clear decision-making process will help ensure that the company runs smoothly and that all founders feel heard and valued.

5. Intellectual Property

Intellectual property is a critical aspect of any business, and the founder agreement should address how it will be handled. This includes who owns the intellectual property, how it will be protected, and how it can be used by the company. This will help ensure that the company`s intellectual property is protected and that all founders are on the same page.

6. Capital Contributions

The founder agreement should also address the capital contributions made by each founder. This includes any financial investments, equipment, or other resources contributed to the business. Establishing a clear contribution policy will help ensure that all founders are committed and invested in the success of the company.

Conclusion

A comprehensive founder agreement is critical for any startup to ensure that all founders are on the same page and that the business remains healthy and successful. By including these six items in a founder agreement, startups can avoid disputes, protect the company`s interests, and ensure that everyone is working towards a common goal. If you need any assistance in drafting a founder agreement, it`s best to speak with a legal professional who is experienced in startup law.