Drafting A Founders Agreement

In the home blog post “8 Issues You Need to Discuss with Your Co-Founder” on CoFoundersLab, David Ehrenberg (CEO of Early Growth Financial Services) outlines several concerns that co-founders need to address before starting a business together. Here are some of the most important ones, sorted by theme: Here are some steps you can take to make a founding deal. They are not binding, but they are a good general guide that you should follow when going through this process. 6. Check and sign! Finally, give each of your co-founders time to check their copy of the founding agreement, consult with their lawyers if necessary, and then sign and date. Once signed and dated by all, it is a legally binding document. Be sure to save an electronic copy containing all users` signatures, which your entire team can access to use later as a reference. 1. Clarity: it will dispel any doubts between co-founders and help establish a strong relationship between partners.2. Bifurcation: It clearly branches out the roles and responsibilities of each co-founder. Congratulations! You`ve gotten closer to running your small business and are following best practices.

A founding deal may not seem like the most important or exciting part of an entrepreneur, but it`s incredibly important – and fruitful. You will learn a lot about your company, your co-founders and yourself. Also, be sure to let your co-founder colleagues know that you want to send your founders` agreement to peer review before you do so. This may be for some sensitive materials. Treat this section of your agreement seriously: it can have significant consequences for your business. Look at some templates online and take the time to have these interviews with your co-founders. 5. Get a second opinion.

But legal opinions are not the only opinions! It may also be a good idea to ask a venturer, or even an advisor, to look at your founding agreement. (You can blacken all personal or financial information if it makes you more comfortable.) When it comes to cash deposits, is all cash considered “deposited capital” – meaning it will stay in the company permanently – or will some of the money be a loan to the company? I have seen many founders who disagree on this issue alone. If you think your co-founder is investing $50,000 in equity in the business, but they expect them to withdraw everything like repaying a loan before they can share in the profits, you need to talk about that before using the money. . . .