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MenuCo-Founder query
I have been offered a co-founder position. (US registered company) As per my understanding, there are usually no contracts between co-founders. Would like to know where it will be documented that I'm co-founder (to show as proof). Also how will the stakes be assigned? Not asking about the percentage but whether there will be a document to show that i have x% stakes in the company
Answers
You definitely want a contract in place. Depending on whether you're a full partner (with 33 or 50% equity) vs a contributing member, you may want to use a SAFE or simple agreement for future equity.
Splits in work and responsibility are definitely tough, especially when you're offering a very specific expertise and working part time.
If you're doing this for huge scale with VCs involved, you want to make sure all your ts are crossed (documents, contracts etc). But if you're exploring an idea with friends, the first thing is to validate your hypothesis with an MVP.
I've written a bit about arrangements in early companies for equity and cash here.
https://mvpengineer.com/pros-and-cons-of-equity-based-technical-cofounders/
Hi
Good question.
There are definitely documents between co-founders. The most important one being a 'co-founder' agreement. I draft lots of them each month, and this is a very important agreement (especially considering that the #3 reason for startup failures is fights between co-founders).
You also want to be sure that the stock is allocated to you. This can be done by giving you a A Deed of Assignment of Stock Subscription, or by updating the company registrar of the transfer of stocks (shares) - but the process depends on which state the company is registered in.
Good luck
I am a mentor on Startups.com, an international lecturer on entrepreneurship and negotiation, and a commercial startup lawyer. I've successfully helped over 400 entrepreneurs, startups and businesses and I would be happy to help you. When scheduling a call, please send me some background information and the 2 main questions you want answered so that I can prepare in advance (to give you maximum value for your money). My reviews: https://clarity.fm/assafben-david
Here is a pretty good guide with a lot of examples that will be helpful:
https://startupguide.hbs.edu/people/founding-team/key-terms-to-include-in-a-founders-agreement/
Everything I read in the guide agrees with my own experience from my past two startups.
After reading through that guide, you can look at this more detailed customizable outline of a cofounders agreement, which has various options embedded in it for key decisions.
https://www.law.upenn.edu/clinic/entrepreneurship/startupkit/founders-agreement.pdf
The options in it are ones that you will have a general understanding of from the previous guide.
Related Questions
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Where do I find a co-founder to join my team?
1) Look up local universities and email the chairperson of whichever programs relate to the type of cofounder you need (i.e. electrical engineering, marketing, etc.). You could even possibly go there in person and put up a sign on a bulletin board. 2) There may be relevant Meetups in your area, go there and network with attendees (www.meetup.com). 3) If you're specifically looking for engineers, look up local 'hacker' / maker spaces that may exist in your area (see here: https://wiki.hackerspaces.org/List_of_Hacker_Spaces). Send me a message if you want to discuss more options and how to access them, all the best, LeeLV
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Why on earth do you need a CTO for that job description? If the product is done, funds aren't likely an issue and you don't need a team to pitch @ pitch competitions if you functional and presumably decent product. Sounds like you need a product guy which you could easily hire who could network with you and avoid title and paying s/he more as well as save your equity. Just a thought - no need to give away the house!KF
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In my last two start ups I have invested heavier into my team than i have in the past and it has paid off big. Hiring an expert in their position has proven to be one of my most successful and stress free action in business. I will add this to my best practices. If you want to learn more about what I've learned and some resources on where to look, schedule a call now while my rates are discounted for the next 24 hours.AF
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I originally answered this question in Quora. Here's my interpretation: Very tough to sleep most nights of the week. Weekends don't mean anything to you anymore. Closing a round of financing is not a relief. It means more people are depending on you to turn their investment into 20 times what they gave you. It's very difficult to "turn it off". But at the same time, television, movies and vacations become so boring to you when your company's future might be sitting in your inbox or in the results of a new A/B test you decide to run. You feel guilty when you're doing something you like doing outside of the company. Only through years of wrestling with this internal fight do you recognize how the word "balance" is an art that is just as important as any other skill set you could ever hope to have. You begin to see how valuable creativity is and that you must think differently not only to win, but to see the biggest opportunity. 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