Founders Agreement & Reverse Vesting Drafting
Prevent co-founder fallout and protect startup equity. SNB Consultancy drafts custom Founders Agreements featuring 4-year reverse vesting schedules, 1-year cliff periods, decision-making matrices, IP transfer deeds, and clear departure mechanisms.
A Founders Agreement is the foundational contract signed between co-founders before or immediately after company incorporation. It establishes equity split percentages, roles and responsibilities, IP contribution assignment, voting control, and most importantly—Reverse Vesting Schedules (ensuring that co-founders earn their equity over time rather than walking away with 50% equity on Day 1).
Our Founders Agreement Services Include:
- Co-founder equity split structuring & initial capital contribution modeling
- 4-year Reverse Vesting Schedule & 1-year cliff period drafting
- Good Leaver vs. Bad Leaver equity clawback & share buyback valuation terms
- Decision-making matrix (Unanimous vs. Majority voting on key corporate matters)
- Pre-incorporation IP assignment & non-compete commitment drafting
Why Every Multi-Founder Startup Needs a Founders Agreement
According to startup statistics, over 65% of early-stage startup failures are caused by co-founder conflict. A structured Founders Agreement prevents equity deadlocks:
Essential Founders Agreement Components
| Agreement Section | Commercial & Equity Function | Investor Diligence Impact |
|---|---|---|
| Reverse Equity Vesting | Equity vests monthly over 4 years with a 12-month cliff (0% vested if founder leaves before Year 1). | Mandatory requirement for seed & Series A venture capital funding. |
| Good Leaver / Bad Leaver | Good Leaver (disability/death) retains vested shares; Bad Leaver (fraud/breach) sells shares back at nominal face value. | Protects remaining founders from dead-weight equity on the cap table. |
| Roles & Decision Rights | Defines CEO final tie-breaker authority on daily operations vs unanimous vote for debt/equity issuance. | Prevents corporate paralysis during strategic disagreements. |
| IP Assignment Deed | Irrevocably transfers pre-existing code, patents, domain names, & designs to the company entity. | Confirms 100% clean corporate IP title for institutional investors. |
Documents Required for Drafting
- Co-Founder Details: Names, PAN, Aadhaar, and designated executive roles (CEO, CTO, COO).
- Proposed Equity Split & Vesting Terms: Agreed percentage shares, cliff duration, and initial cash investment per founder.
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ViewDraft Your Founders Agreement
Partner with SNB Consultancy for co-founder equity split structuring, 4-year vesting schedule drafting, and dispute resolution alignment.
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