LEGAL
Governance & Compliance
Do You Really Need a Separate Founder’s Agreement?
Founder’s agreements align expectations early on—covering roles, equity splits, vesting, and decision-making. They’re not legally required, but they prevent future disputes and strengthen your foundation.
Why it Matters
While many advisors recommend a dedicated "founder's agreement," the key terms that protect co-founder relationships can be effectively covered through standard startup legal documents. Understanding how your corporate documents work together helps you avoid document bloat while still addressing critical founder issues.
Founders Checklist
How Standard Documents Cover Founder Issues
Your standard corporate documents already address most founder concerns:
Restricted Stock Purchase Agreements (RSPAs)** handle equity ownership, vesting schedules, and repurchase rights
Proprietary Information and Invention Assignment Agreements (PIIAs)** cover IP ownership and confidentiality
Bylaws** establish governance, voting rights, and decision-making processes
Board consents and resolutions** formalize roles, compensation, and major decisions
Employment agreements** (even for founder-employees) define responsibilities and compensation
Founder Fails
"Without a founder's agreement, we have no protection" — Your corporate documents provide substantial protection when properly drafted
"A separate agreement is always necessary" — Many successful startups operate effectively using only standard corporate documents
"Standard documents don't cover founder-specific issues" — Modern startup documents are designed with founder concerns in mind
When to ask for Help
At the very beginning—before or right after incorporation
If you’re splitting equity or defining contributions
When there’s more than one founder with overlapping responsibilities
If a founder plans to leave or changes their level of commitment
Before raising money or bringing in outside advisors or execs
Frequently Asked Questions
Q: If we don't have a separate founder's agreement, how do we handle potential disputes?
A: Your bylaws and corporate governance documents already include mechanisms for resolving deadlocks, board voting, and decision authority. Many successful startups rely on these standard mechanisms rather than creating separate dispute resolution processes.
Q: What about founder departures?
A: RSPAs with proper vesting provisions and repurchase rights already address what happens when a founder leaves. These are the same provisions you'd include in a founder's agreement, just in a different document.
Q: Do investors expect to see a founder's agreement?
A: Investors care about the substance, not the form. They want to see that you've addressed equity splits, vesting, IP assignment, and governance — whether in a single document or across your standard corporate documents.