Question
We are four co-founders based in Austin, TX. We have been working on a software project for two weeks which has real commercial potential. We would like to launch our startup ASAP, but we agreed that we should have a written agreement in place first so everybody's commitment and share is clear. What exactly do we need to put into this agreement? Do we need a lawyer for this?
Answers: 2 public & 0 private
There are a number of basics:
- weighting of each founders contribution - translating into shares, including a portion for future employees
- shareholder's agreement, how founders dispose, resolving voting conflicts (though can default in articles of association) or acquire from each other
- vesting schedule = expected timeframe for sweat equity to value in startup
- good/bad leaver provisions - what happens if for one reason or another a co-founder leaves (death, health, personal reasons)
There are a number of clauses relating to specific events like dispute resolution or liquidation but these are generally standardised in the various seed documents like Y-combinator or Techstar documents. Whilst a lawyer is useful to explain some of the more exotic terms like liquidity prefs, there are incubators and often entrepreneur friendly groups like Founders Institute who often have experienced mentors who've gone through the pain and can tell you why those clauses exist.
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