Table of contents
Part 1 of the Startup Playbook Series.
In part 1 of the Startup Playbook Series, we will consider the very first steps you should take when entering into a venture with a new cofounder.
Startups can take a little while to get going. You have other commitments – a job, study or another business to run; friends and family; bills to pay. Finding the time and resources to start is not always straightforward.
You may not be ready to launch, register a company, sign a lease, or commence production – but you are still moving forward and making plans.
At this stage, you may have already started work on your new venture – and this may include having started work with a co-founder.
Your relationships with your co-founders are the most important relationships to any startup. There is a reason that you have chosen these people to be partners in the adventure. Often they are relatives, friends, or former colleagues. These are relationships we believe ought to be protected.
This is where Founders Agreements come in to play. A Founders Agreement is simple yet formal document which sets out the key understandings between co-founders, and promises being made to each other – all before you either register your business, or consider early-stage investment.
Things to consider for your Founders Agreement:
- What you are hoping to achieve
- What the business will do
- Who will own what percentage of the business
- Who will be the directors of the business
- Confidentiality obligations
- Non-compete obligations
- ‘Events of Default’ – aka what happens when things go wrong
- Dispute resolution mechanisms
- What each co-founder has contributed to the business
- Promises of conduct between co-founders
Read on to Part 2: Set up & Structuring.
Interested to know more about what ground rules to set with your cofounders? We have a dedicated Startup & Capital team who specialise in Founders Agreements and early stage considerations. Get in touch with us to discuss how we can help your startup grow.