Founder agreement template: a clause-by-clause framework

1. Parties and purpose

Name each founder and the company or intended company, and state the business each founder is building.

2. Equity

State each founder's percentage and the basis for it. Cover how the split changes if new founders, investors or an ESOP pool come in.

3. Vesting

Equity is commonly earned over several years, often with an initial cliff, so a founder who leaves early keeps only what they earned. Decide the schedule, cliff and what happens on exit.

4. Roles and time commitment

Record each founder's role, whether the work is full-time and what outside activities are allowed.

5. Decision-making

Decide which decisions need unanimous consent, which need a majority and who handles day-to-day matters. Agree how to break a deadlock.

6. Money in and money out

Cover capital contributions, loans from founders, salaries and when profits are distributed.

7. Intellectual property

All IP relating to the business should be assigned to the company, including work done before incorporation. This is one of the first things investors check.

8. Confidentiality and restrictions

Include confidentiality obligations. Post-exit non-compete clauses are limited under Indian law, so rely more on confidentiality and IP terms.

9. Leaver terms

Set out what happens if a founder resigns, is removed or cannot continue, including how unvested and vested shares are treated.

10. Disputes and governing law

Choose a dispute process, often mediation then arbitration, and state the governing law and venue. Remember stamp duty and signing formalities.

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