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Ask HN: Is there a standard founders agreement template?

41 points by etothepii ↗ HN
YC have changed the industry with the introduction of the SAFE. Has anyone come across a similar one page standard founders agreement?

Things it should obviously cover:

  - Vesting schedule
  - Cliff
  - Allocation of costs
Things it should possibly cover:

  - Moving to full-time
  - Dispute resolution
  - Founders leaving voluntarily
  - Kicking founders out
  - Intellectual Property

7 comments

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deepsun
It's called "Shareholders' Agreement". Any lawyer can get it for you for couple thousands dollars (CA prices), it's very common.

Probably you can talk them to just send you a template, and you will fix it for your purpose for less than $1k.

etothepii
Unfortunately I don't think that a shareholder's agreement is what one would be looking for in the large majority of cases. If serious investment is required then obviously it would be a good idea, but a weekend or part-time project between 3 friends doesn't need a company to be incorporated before starting, but a vesting schedule with a cliff should probably have been agreed in almost all cases.
jamesmishra
You will need a very tiny font size to fit all of those terms on one page.

But here are some thoughts from me that might help:

1. The industry-standard startup vesting schedule is over a 4-year term with a 1-year cliff. Document processors like Clerky set these terms by default when creating a new company or adding a new employee. However, it often takes 10 years for a company to have a successful IPO or acquisition, so a 4-year term might be too short. Similarly, many startups aren't off the ground until 24 months after incorporation, suggesting that a 1-year cliff might be too short. However, there is a huge social stigma to offering non-traditional vesting terms.

2. I don't know what "moving to full-time" means. All founders should be full-time from Day 1. If not, then they are either a contractor or a part-time employee.

3. Every startup should have a tie-breaker for disputes. By default, this should be the CEO founder. But for startups with two founders that want to be as equal as possible, the tie-breaker could be an external board member or an advisor specifically tasked as the tie-breaker.

4. Every founder, employee, and contractor should sign an IP assignment agreement. It's easy to find a template on the Internet with fairly standard terms, but even a simple IP assignment agreement will be many pages long.

etothepii
It's perfectly possible to start building a tech startup while working on it part-time. Lots of good tech ideas can be implemented and tested with a couple grand and some evenings and weekends. If you have the skills to execute you probably earn a 6-figure salary or are at a good college. Probably better to try (and fail) with a number of ideas with a few different co-founders before committing to full-time / dropping out.
dctoedt
A few years ago I ran across a "Founder Accord" by a small NYC law firm; I haven't looked at it in any detail so I can't say whether it covers the requisite issues. [0]

In case it helps, there are other contract resources listed on a Web page that I use for a Startup Law 101 talk I've been giving for a number of years at business schools, entrepreneur meet-ups, etc. [1]

(Usual disclaimer: I'm a lawyer but not your lawyer.)

[0] https://www.mcoblaw.com/founder-accord

[1] https://www.oncontracts.com/startup-law/

brudgers
YC's SAFE is predicated on the company being organized as a Delaware C-corp. Organization as a Delaware C-corp also provides a framework for the important issues around dispute resolution: there's a board of directors and there are shareholders with voting stock.

A Delaware C-corp also handles intellectual property by virtue of holding (or licensing) it all directly. It handles the allocation of costs the same way.

In a Delaware C-corp, the founders are no more than employees from a legal standpoint. Everything else on the list is properly part of an employment contract and negotiated as such along with all sorts of other things.

Some simple advice: Don't go into business with someone you think you might have to kick out. Don't go into business with someone who you think you will need to lawyer up over their coming onboard full time. If you don't really trust someone, you don't really want to be in business with them.

Good luck.