Founders agreement, employment and contractor agreements, customer terms, privacy policy, NDAs. What each is for, and which ones matter.
12 min read · Level 3
Contracts are boring right up until they are the only thing that matters — a co-founder leaving, a customer disputing an invoice, a data incident, an acquisition. The absence of basic documents also reads as a signal about how the company is run, which affects diligence well beyond the specific gap. Templates are fine for low stakes; the danger is signing one you never read and committing to an uptime you cannot meet.
The documents an early company genuinely needs:
Founders agreement — equity, vesting, roles, departures Employment / contractor agreements — including IP assignment and confidentiality Customer terms of service — what you promise and what you do not Privacy policy — required almost everywhere if you hold personal data Shareholders agreement — once there are outside shareholders NDAs — occasionally, and less often than people think
Because contracts are boring until the moment they are the only thing that matters — a co-founder leaving, a customer disputing a bill, a data incident, an acquisition.
And because the absence of basic documents is read as a signal about how the company is run. It affects diligence beyond the specific gap.
This is educational information, not legal advice. Rules differ by country and change — get advice from a qualified professional in your jurisdiction before acting.
Sources: NVCA — model legal documents
What matters most, in order:
1. Founders agreement. Highest stakes, most often skipped. Covers the conversation nobody wants to have, at the only time it is easy.
2. IP assignments. Covered separately, and the most common diligence problem.
3. Customer terms. What you are promising about uptime, liability, data and refunds. Templates are a reasonable starting point for a low-price self-serve product; an enterprise contract is not the place for a template.
4. Privacy policy. If you hold personal data — you almost certainly do — this is a legal requirement in most jurisdictions, not a nicety.
5. Shareholders agreement. Once outside money arrives. Usually drafted as part of the round.
On NDAs: founders often want investors to sign one. Almost no investor will, and asking marks you as inexperienced. They see many similar companies and cannot take on that liability. NDAs are appropriate with vendors, potential acquirers in a real process, and sometimes enterprise customers — not with investors.
First-time founders often download templates for everything and never read them. A template with the wrong governing law, or promising an uptime you cannot meet, is worse than nothing because you have made a commitment you did not notice.
The second mistake: asking investors to sign an NDA. It signals inexperience and gets refused.
The third: no privacy policy while collecting emails and usage data. It is a legal requirement in most places and one of the easiest things to fix.
Highest stakes, and easiest while everyone is happy.
Employment and contractor, without exception.
Especially uptime, liability caps and refunds. You are committing to these.
Describe what you actually collect and do. A policy describing something else is worse than none.
Self-serve terms: template. Enterprise contract, funding round, anything unusual: lawyer.
They will decline and it costs you credibility.
Founders agreement and IP assignments now. The rest as each becomes relevant.
Do not build a full legal stack pre-revenue. Founders agreement, IP assignments and a privacy policy cover the realistic risks at that stage.
Almost no investor signs an NDA to hear a pitch — they see many similar companies and cannot take on that liability. Asking is a well-known marker of a first-time founder, and it costs credibility before the conversation has started.
NDAs belong with vendors, acquirers in a real process and some enterprise customers. Not with investors, and not with people you are asking for money.
Downloaded terms of service frequently contain uptime commitments, liability positions and refund obligations the founder never noticed. They are real commitments, and the first time anyone reads them carefully is usually during a dispute or a diligence process.
Read your own customer terms once, properly. You have already promised whatever is in them.
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