Founder Agreement
A contract between co-founders defining equity splits, roles, vesting, and IP assignment.
Definition
A founder agreement is a contract between co-founders that specifies equity splits, vesting schedules, roles and responsibilities, intellectual property assignment, and what happens if a founder leaves. It is typically signed at or before incorporation. Without a founder agreement, disputes over equity and control can destroy a company. Most investor-grade founder agreements include 4-year vesting for all founders.
Why it matters
The founder agreement determines how much equity founders hold and under what conditions. If a co-founder leaves without vesting, their unvested shares return to the company's pool, which can benefit employees. A messy founder dispute (no agreement) can tank the company entirely.
Example
Two co-founders sign an agreement: 50/50 equity split, 4-year vesting with 1-year cliff, and all IP created for the company is assigned to the company. If Co-founder B leaves after 1 year, they keep 25% of their shares; the rest returns to the pool.