At the beginning of your company’s life, with all the excitement, it is hard for you to imagine future departures or discord between you. But it happens: one of you finds another project about which she is more passionate, or two of you start to get on each others’ nerves. (Yes, collectively founding a startup is a bit like collectively founding a family!)
Or what if later on one of you wants to sell your shares and move on and the rest of you want to stay put?
Or worse, one of you finds a buyer for her shares, and the buyer does not want to purchase the shares of all the founders, just enough to control the company? If that happens, one or more of the members of your founder group makes an exit, but not all of you.
Unfortunately, these things do happen, more often than you believe when you are all starting out.
Founder Agreements envisage what can go wrong for the founders themselves, and furnish the founders with solutions crafted to address the problems before they arise.
I worry about what can happen, so that you can worry about what your startup is doing.
Here are three very helpful resources if you’d like more information on these agreements:
http://strtp.com/notes/founding/founder-agreements/: David Touve recently joined the i.Lab at UVA as the Director of this new ventures program, after serving as an Assistant Professor and Director of the Galant Center for Entrepreneurship within the McIntire School of Commerce at UVA. This post concerns Founder Agreements: his online course is full of useful materials about other startup and founder issues.
https://www.entrepreneur.com/article/236044 This is a tight 2014 article by Babak (Bo) Yaghmaie, who is a partner in the Cooley’s New York office. He is the head of the Business & Finance Group there. I have to admit to having a soft spot for Cooley’s New York office which, in an earlier incarnation, was the law firm where I started my career, Kronish Lieb Weiner & Hellman.
https://blog.simeonov.com/2010/02/22/startup-founder-agreements/: this is a very interesting post from Simeon Simonov, a young investor and founder who seeks to apply the principles of agile development to startup development. His “core expertise is building, growing and successfully exiting technology startups and counseling founders & CEOs on how to do the same,” according to his LinkedIn profile.