Cofounder Agreements: What to Settle Before You Start

Starting a company with a friend or colleague can be great, until money, roles or workload cause disagreements. A written agreement turns assumptions into shared rules.

Topics to discuss

• Roles: who decides what, and who is responsible for which area?
• Ownership: how is the equity divided, and why?
• Vesting: shares earned over time, such as four years with a one-year cliff, so someone who leaves early does not keep a full stake.
• Time commitment: full-time or part-time, and for how long?
• Money: salaries, expenses and how much each person invests.
• Intellectual property: the company should own work done for the business.

Decision making

Decide how to resolve disagreements, and what requires both signatures, such as selling the company or raising money.

Planning for exits

Agree what happens if someone wants to leave, is not performing or cannot continue. Clear terms protect both sides and the company.

Make it formal

Put the agreement in writing, and have a lawyer prepare the legal documents. Rules for equity and taxes vary by country.

Keep talking

Hold regular check-ins about goals and feelings, not only tasks. Honest conversations are easier early than in the middle of a crisis.

A few uncomfortable talks at the start can save the partnership and the company later.