Co-founder Agreements | The Complete Guide
How to structure co-founder relationships. Equity splits, vesting, roles, and departure terms.
Why Co-Founder Agreements Matter
Co-founder relationships fail. It's one of the top reasons for startup failure. A proper agreement prevents disasters.
"You don't need a co-founder agreement when things are going well. You need it when they aren't."
The Key Elements
1. Equity Split
- Equal (50/50) for 2 founders
- 60/40-70/30 for 3+ (if asymmetric)
- Consider contribution, not just title
2. Vesting
- Standard: 4 years, 1-year cliff
- Acceleration: Single trigger, double trigger
- Credit: For time served
3. Roles
- CEO, CTO, COO, etc.
- Clear responsibilities
- Decision rights
4. Departure
- Voluntary quit
- Involuntary termination
- Death/disability
5. IP Assignment
- All IP belongs to company
- Cannot work on side projects
- Non-compete
The Worst-Case Scenarios
Scenario 1: The Departure
-Founder quits but keeps equity. Solution: Unvested equity stays.
Scenario 2: The Deadlock
-Equal partners, can't agree. Solution: Tie-breaking mechanism.
Scenario 3: The Underperformer
-Founder not pulling weight. Solution: Vesting + performance.
Scenario 4: The Exit
-Founder leaves before exit. Solution: Good leaver/bad leaver.
Templates
Founder Vesting Template
``` Total equity: 100% Vesting: 4 years Cliff: 1 year Acceleration: Single trigger ```
Departure Template
``` Good leaver: Keep vested Bad leaver: Forfeit all Clawback: If fired for cause ```
Conclusion
Get it in writing. Get it signed. Get it verified.
"A difficult conversation now prevents a devastating dispute later."
Use Our Tools
Create your founder agreement with our tools.