What are Founders and What is a Startup Founders' Agreement?
Updated: Nov 10
Founders are people who have developed a concept for a startup business, have brought necessary expertise to a startup, and are the ones responsible for getting the business going, securing the resources the business needs, and doing whatever is necessary to keep the startup moving forward. When there are multiple Founders of a business startup, a Founders' Agreement is essential to establish a consensus as to the rights and obligations between them and to address any issues that should be resolved before the business is started. Here are examples of issues that should be dealt with in a Founders' Agreement:
Who the Founders are
What their roles and responsibilities are
What their ownership interests are
What their contributions shall be
What intellectual property is to be contributed by the Founders
What, if anything, the Founders have to do to earn or retain their owner interests
What commitments of time, expertise, or energy are expected of the Founders
What the capital structure of the enterprise shall be
What would happen should a to the Founder's ownership interest should a Founder die, become incapacitated, leave the enterprise voluntarily, fail to fulfill commitments to the enterprise, etc.
Aside from the above items, it is important that the Founders also address in the agreement their respective goals and objectives, personally as well as for the enterprise, the core values that will drive the enterprise, the commitments the founders believe they should be making to each other, and the type of business culture they want to develop.
Lindsay Spiller is the founder of Spiller Law, a San Francisco business, entertainment, and estate planning law practice. Mr. Spiller is a San Francisco business lawyer who serves clients throughout California and particularly in San Francisco and Los Angeles. You may find more information about Spiller Law's business legal services at https://www.spillerlaw.com/business-law.
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