A Founders' Agreement is an agreement used to govern the relationship between the founders of a company and to define their rights and responsibilities. The main purpose is to ensure that the founders are in agreement and avoid misunderstandings and disputes in the future. It covers key areas such as:
Whether you're hoping to go public or starting a modest company with a few close friends, a Founders' Agreement is a great first step for your business.
It will help you provide the foundation to your business by outlining expectations, guiding decision-making, and reducing risk.
In one simple document, you'll be able to establish important rules that will set the stage for how you will run your business. Without a clear understanding of how you will work together, things can get messy quickly.
Drafting a Founders' Agreement involves envisioning a venture, sharing passions and ambitions, negotiating, experimenting with business-cases for various issues, and making projections.
When drafting a Founders' Agreement, it is important to focus on a number of key clauses, in particular: