Updated: Apr 12
✍ 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.