A co-founder agreement is the written version of everything you've promised each other. Its main job is not to win a court case. It's to make sure you remember the same things in two years.
Ownership
- Each founder's share, in percent.
- Vesting schedule, cliff and start date.
- Good and bad leaver terms, with buy-back prices.
- What happens to shares on death or long-term illness.
- Whether anyone needs approval to sell or transfer shares (right of first refusal).
Roles and time
- Titles and areas of responsibility.
- Expected weekly hours and when each goes full-time.
- Who is director or managing director, and their powers.
- Spending limits: how much each founder can spend without asking.
Intellectual property
- All work for the project (code, designs, name, domain, content) belongs to the company.
- Anything built before the company exists is transferred to it.
- Side projects: what's allowed and what isn't.
Money
- Who puts in money, how much, and whether it's a loan or equity.
- When and how founders start paying themselves.
- How profits are used: reinvested or paid out.
Decisions and disputes
- Which decisions need everyone's agreement (new co-founder, raising money, selling the company).
- Who has the final say in each area.
- How to break a deadlock: a mentor, a mediator, a fixed procedure.
- Confidentiality and non-solicitation (no taking staff or customers if you leave).
- Governing law and where disputes are resolved.
Once you register a company, a lawyer should move these terms into the shareholders' agreement or articles. Until then, a signed agreement between founders is far better than nothing.