Founder agreement

A written agreement between a company's founders setting out ownership, roles, vesting, decision-making and what happens if a founder leaves.

Example

Three co-founders signing an agreement with four-year vesting and leaver terms.

Important

An unsigned or outdated agreement may not protect anyone.

Related terms

• Vesting Schedule — The timetable over which employer contributions or equity become fully owned by an employee.
• Leaver provisions — Terms setting out what happens to a departing founder's or employee's shares, often distinguishing good leavers from bad leavers.
• Dead Equity — Ownership held by people no longer contributing to a company, such as departed co-founders or inactive advisers.

Lessons that explain it

• The co-founder relationship is where many startups actually fail — Diligence on a founding team examines how the founders met, how long they have worked together, how they divide decisions, how they resolve disagreement and how they split equity. (10 min)

All 578 terms in the Investing glossary