Question
I have been in discussions with two possible co-founders and we want to launch a startup. The next couple of months will be dedicated to MVP development and we will work on this besides our current jobs. We have talked about the money each of us would invest in the startup and about how much time each of us can probably commit. Our shares in the startup will not be equal but we have not decided on any numbers yet. At this point do we need to bring in a lawyer for a founders' agreement? It feels early and I was just going to draw up an informal agreement on shares, invested time and money for each of us. Is this acceptable?
Answers: 1 public & 0 private
The short answer is no, you don't need to hire a lawyer. You can probably draft a binding contract yourself. Should you do it yourself is another question entirely. An experienced attorney will know which deal points your agreement should contain. It is highly probable that you will leave something important out of an agreement you write yourself. There are also tax consequences in how you structure your agreement that an experienced attorney will address. I have many years under my belt forming companies, as well as an LL.M. in taxation, and I can tell you there are many pitfalls for the uninitiated. When you leave something out of your agreement, you may have to rely on memory when the times comes and everybody will have a different memory of what their deal is. If you are concerned about the cost of hiring an attorney to draft the agreement, let me assure you that it will cost you many times more to fix whatever defects your self-written agreement contains. Doing it right the first time is always cheaper than unf**king it later on. Feel free to contact me if you have any questions.
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