Starting off your start-up on the right foot with a founders' agreement

Co-founding a business is one of the most exciting things you can do as an entrepreneur. Anyone who has felt the spirit of an early stage start-up knows it.

And depending on where your sweet spot is as a founder, it can be easy to get caught up in the planning, the marketing, the launch and neglect the foundations that are going to help you as you scale and look for funding and investment.

As a lawyer, of course, I am going to tell you to get your legals absolutely watertight! There is so much to think of for a start-up business, from forming a legal entity, to formalising agreements and protecting your intellectual property.

Great start-ups are often created by friends, partners or connections with a shared passion or interest. All too often that enthusiasm to take a new idea to market is so intense, you might miss out on one of the most fundamental legal documents to get in place.

A founders’ agreement.

Because even the closest of friends may run into trouble when times get tough, which they will on occasion, when the business starts to change, when life inevitably happens and plans change. So having that agreement up front to align on expectations and have a plan if things change, is absolutely key.

To help prepare a founders’ agreement, co-founders should look to discuss:

How much time and effort each of you will be investing in the business

What the share splits are

What happens if life changes and one of you wants to leave the partnership?

As well as planning for all those eventualities that you hope might not happen, yet so often do, having a founders’ agreement in place is critical when you are looking for investment. It shows to investors that you are organised and prepared for all business eventualities and that the intellectual property you create is owned by your business and will not disappear in the event of a founder departing.

So before you set off on your co-founder journey, in-between the excitement and the brand design and the website build and your business model canvas, take a moment to talk to an experienced legal adviser who can help you think through those key points when it comes to how your partnership works and can be navigated in the event of a change. It will always pay to be prepared for the unexpected!  

Dan Adams is a lawyer and entrepreneur who has co-founded his own start-ups and advises many others on legal and strategy issues. To contact Dan for legal support with your start-up business, drop him an email on