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Why a Founder Agreement is important

Updated: Apr 12, 2023

✍ Why a Founder Agreement is needed...

📜 We started with a Founder Agreement.

Would we have written it in the same way now?

😂 No way.

But having one has been extremely helpful, and here's why:

🏫 It creates governance.

🔭 This is useful for investors to see.

🖋 It also means you have held the pen.

Most future discussions on equity/vesting should take into account the precedent you have set, especially if an initial agreement is sensible and not outrageous.

🥧If you've earned out a portion under an existing agreement that your current investor base is happy with, it makes it more difficult for a future investor to get rid of it wholesale.

I'm not saying this can't happen, or won't.

Some investors insist on a boilerplate clause.

🛹 But even if you end up tearing up an existing one, the fact you had the nouse to set up governance showed an aptitude for de-risking one of the most significant issues for early-stage businesses - that of the original personnel leaving the business with all of the equity.


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