Founders' Agreement Template

This founders' agreement template includes most of the corporate structure decisions that many founders leave until later than they should.

• Includes allocation of equity and percentage of ownership of each founder at inception
• Establishes vesting with cliffs to prevent founders from quitting too soon
• Ensures all IP created by the founders is assigned to the company at inception
• Includes definitions of each founder's position, title, and pay
• Includes initial capital contributions and records future fundraising decisions

Download the founder's agreement template for free in Word or PDF. Editable and ready to customize for your startup

Who It's For

This founders' agreement template is best suited to founding teams that have not yet incorporated or just recently formed their company entity and haven't legally recorded the terms between founders. If you fit into either of these groups:

• Multiple founders joining forces to provide technical, operational, or creative know-how
• A technical founder employing or signing up a business partner or product co-founder
• An individual founder who wants to bring on a partner partway through development, who will be bringing IP, capital, or work to the company
• A founding team that has started working before incorporating

It's not a shareholders' agreement or an employment contract. Those things should live on top of this agreement. This agreement is the framework that sits below those agreements and constructs the relationship from day one.

What's Included in the Template

This founders' agreement template includes many of the basic provisions used to outline relationships between co-founders of a startup company:

• Business idea and assignment of IP: assigns the business idea and any intellectual property to the company.
• Capital contribution: tracks each founder's cash and notes contribution for services or tangible property, and its valuation
• Stockholders' equity table: tracks the number of shares and the percentage ownership of each founder
• Vesting schedule and cliff provisions: outlines when shares vest based on continuous service of each founder
• Stock class and voting rights. Specifies that all founders have the same class of stock and equal voting rights.
• Management and titles: lists the title and board position of each founder and defines the salary or draw
• Transfer and sale of shares: dictates when shares can be sold to third parties.
• Company structure: the legal entity through which the business idea will be sold before incorporation

How to Write Your Founders Agreement

The template gives you the structure. Here is how to use it strategically.

1. Agree on vesting terms while everyone is comfortable

Agree to a 4-year vesting schedule with a 1-year cliff. If there's no cliff, you're allowing a founder who quits at month eight to take 8 months' worth of equity with them with no legal recourse. Also agree in writing on what "consecutive service" means.

2. Base equity ownership on what's currently being contributed

Promises for future work do not equal equity. If one founder is contributing IP, a prototype, or months of development work, those contributions have value. Value that should be reflected in the ownership split.

3. Agree on what happens to unvested shares on departure

Under the template agreement, if a founder departs before they are vested, all unvested shares revert to the company. Read that line. Then make sure your co-founders read it too before you all sign. If someone does leave, that section will spark a huge fight. Better to fight about it now when it doesn't matter.

4. Clarify the scope of IP being assigned

The intellectual property assignment section covers the idea and technology specifically created for the business. But what happens if a founder has existing code libraries or other tools that could be used for the business, but weren't developed for it? Decide now which items are in scope for assignment and which aren't.

5. Document roles before you need to enforce them

Leaving the management responsibilities section blank is way more common than it should be. Most founders don't want to bother. The reason? They believe the roles of each founder are obvious. They're not. This is why it’s important to decide who does what at the start to avoid trouble later.

Documents Often Used Alongside a Founders’ Agreement

• Memorandum of Agreement (MOA): If you’re still aligning on high‑level roles, goals, and collaboration terms before drafting the formal Founders Agreement, an MOA helps document intent and scope.
• 50/50 LLC Operating Agreement: Once you form the company (especially an LLC), use this to define governance, decision‑making, capital contributions, and profit splits when ownership is equal.
• Share Transfer Agreement: Add this when founders need a clear path to buy, sell, or transfer equity between themselves or to new stakeholders over time.
• Joint Venture Agreement: If two founder groups or entities collaborate on a specific project while keeping separate companies, use this to set contributions, control, and profit sharing.
• Tripartite Agreement: Use this if a third party (like an investor, IP owner, or key supplier) must be party to obligations between the founders and the new company.