Loading...
Answers
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
-
As an entrepreneur and founder of a mobile app startup, what skills are required for me to know?
The answer is what you do best! I have seen from programmer to UIX Engineer to Marketing or someone who dont know any of this managing App Developing Team. As any other business knowing HR and having clear vision and understanding of the industry is most important. In generally a Mobile App StartUp should not be a very big Team, I am assuming 3-10 is ideal team size. But retaining good developer and designer in most demography is a challenge. If you have not a programmer you could hire a CTO, if you are not a marketer you could hire a CMO. But to really run a company like Pro, a insider you have to have clear idea, which language, framework platform you are using, how marketing for your specific sector. You dont have to code, but you need to have basic idea, so you could at least understand your team's work load and time frame. Or you could also have a co-founder who knows what you don't. I hope it gives you some idea. I could give specific answer if I know your specific situation. Best of luck!MA
-
How can I structure a contract to bring on a co-founder to help my business when I can't pay them?
Disclaimer: I am not a lawyer nor an accountant, and this is not "professional advice." I have, however, set up a few businesses and had partners. What you need to do is incorporate and then write up an Operating Agreement that lays out the terms of your partnership. Who owns what. How the new partner will "buy into" the organization with their sweat equity. What happens when revenue targets are reached. And how exactly you separate when it's time to move on. Lay these details out and more in your operating agreement. You'll be so happy you did, later. When you incorporate, you may do this on your own...or you may want an attorney or accountant to help. They will know how to set up an operating agreement, but now that you know the term it's likely you can google a template. There'll be a lot of technical mumbo jumbo in there you probably won't need, but the section headers will guide you in the right direction.JK
-
What is a better title for a startup head....Founder or CEO? Are there any pros/cons to certain titles?
The previous answers given here are great, but I've copied a trick from legendary investor Monish Pabrai that I've used in previous startups that seems to work wonders -- especially if your company does direct B2B sales. Many Founders/ CEOs are hung up on having the Founder/ CEO/ President title. As others have mentioned, those titles have become somewhat devalued in today's world -- especially if you are in a sales meeting with a large organization. Many purchasing agents at large organizations are bombarded by Founders/ CEOs/ Presidents visiting them all day. This conveys the image that a) your company is relatively small (the CEO of GM never personally sells you a car) and b) you are probably the most knowledgeable person in the organization about your product, but once you land the account the client company will mostly be dealing with newly hired second level staff. Monish recommends that Founder/ CEOs hand out a business card that has the title "Head of Sales" or "VP of Sales". By working in the Head of Sales role, and by your ability to speak knowledgeably about the product, you will convey the message that a) every person in the organization is very knowledgeable about the ins and outs of the product (even the sales guys) and b) you will personally be available to answer the client's questions over the long run. I've used this effectively many times myself.VR
-
I'm a single solo founder. How much equity should I give to new cofounders / partners?
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
-
Is it OK not to have CTO co-founder?
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
the startups.com platform
Copyright © 2025 Startups.com. All rights reserved.