

Co-founder agreements - OldButNew

Can anyone point me to an example of a good starting point for a good written agreement between cofounders (pre-funding)?
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alain94040
The way it's usually done (in Silicon Valley) at least, is that all co-
founders are shareholders of a C corporation. They buy their shares at a very
low price, and the corporation has buy-back rights to those shares in case the
co-founder leaves before 4 years.

Note: it's slightly different from regular employees who have stock options.
The main differences are: employees don't own stock upfront, plus there
usually is a 1-year cliff for vesting, so if the employee leaves before a
year, they have nothing.

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OldButNew
Thanks very much for the advice

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giffc
If you want to incorporate, I would get a startup-savvy lawyer in your area
and just use their boilerplate restricted stock and IP agreements for you and
your co-founders.

If you aren't ready to incorporate, then just write the terms everyone has
agreed to in plain, unambiguous English, and have everyone sign it and give
everyone a copy. Note the equity splits, the agreed-upon vesting schedule
(standard seems to be 4 year vesting, first 25% after 1 year, then monthly
after that, with double-trigger acceleration upon acquisition), what everyone
is agreeing to for the IP, and any other rules you might be coming up with for
the business.

This just keeps everyone on the same page right from the get-go, and prevents
revisionist history later. However, once you get serious, I would go ahead and
incorporate.

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staunch
I think that's good advice. Either get a lawyer involved or avoid
incorporation and complex legal documents entirely.

One thing that you absolutely do not want to mess up is the IRS' 83(b)
election rule: [http://www.startupcompanylawyer.com/2008/02/15/what-is-
an-83...](http://www.startupcompanylawyer.com/2008/02/15/what-is-
an-83b-election/)

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OldButNew
Thanks for pointing me to this

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brudgers
Your lawyer.

It's not a DIY project.

Even when it is just small business.

