Co-Founder Agreement

A Complete Guide To Co-Founder Agreements

Build your business on clear foundations and mutual trust.

A Co-Founder Agreement is a contract between business partners that sets out how they’ll work together to start, own and run a company. It defines each founder’s roles, responsibilities, equity shares and what happens if one leaves or the business changes direction.

This guide explains everything you need to know about Co-Founder Agreements - including what they cover, why they’re essential for startups, how to create one properly and what legal protections to include from the outset.

CONTENTS

• What is a Co-Founder Agreement?
• Who Needs a Co-Founder Agreement?
• Benefits of a Co-Founder Agreement
• When to Use One
• What to Include
• Legal Requirements
• How to Create a Co-Founder Agreement
• Cost of a Co-Founder Agreement
• Template Example
• Co-Founder Agreement FAQs
• Get Started with Robot Lawyer

What is a Co-Founder Agreement?

A Co-Founder Agreement is a legal document that formalises the relationship between the founding members of a startup or new business venture.

It outlines:

• Equity ownership and share distribution.
• Roles and responsibilities of each founder.
• Decision-making processes and voting rights.
• Intellectual property (IP) ownership and assignment.
• Remuneration, expenses, and profit distribution.
• Exit procedures and what happens if a founder leaves.

Think of it as a “pre-nup” for your business - designed to prevent misunderstandings, disputes or imbalance as the company grows.

Who Needs a Co-Founder Agreement?

Any business started by two or more people should have one in place. It’s particularly important for:

• Startups formed before incorporation.
• Small companies or partnerships launching a joint venture.
• Tech founders developing IP or software.
• Creative or service-based founders sharing ideas and assets.
• Businesses raising investment, where investor due diligence will require a written agreement between founders.

Without one, even long-standing friendships can quickly become complicated when money, IP or direction come into play.

Benefits of a Co-Founder Agreement

A well-drafted agreement doesn’t just prevent disputes - it builds confidence between partners and with outside investors.

Key benefits include:

• Clarifies expectations from day one.
• Prevents disputes by defining ownership, duties, and decision rights.
• Protects intellectual property, ensuring the business owns all outputs.
• Sets exit terms, including vesting, buy-outs, or resignation procedures.
• Supports investor trust, showing governance and founder alignment.

In short, it helps founders stay focused on building the company - not negotiating the basics later.

When to Use a Co-Founder Agreement

Create a Co-Founder Agreement as soon as you:

• Start working on a business idea or product together.
• Contribute money, IP, or assets to a joint venture.
• Agree to share ownership or profits of a new entity.
• Plan to incorporate a company and issue shares.

It’s best to finalise and sign it before incorporation or fundraising, while roles and ownership are still being defined.

What to Include

The most effective Co-Founder Agreements balance clarity, fairness and flexibility for future growth.

Key sections typically include:

1. Founders and Contributions

• Names, roles, and contact details of all founders.
• Description of contributions - cash, equipment, expertise, IP or labour.

2. Equity and Ownership

• Percentage ownership for each founder.
• Vesting schedule (e.g., shares earned over time).
• Conditions for dilution or reallocation.

3. Roles and Responsibilities

• Operational duties and leadership roles.
• Time commitments and working expectations.
• Authority for signing contracts or making decisions.

4. Decision-Making and Voting

• Procedures for resolving deadlocks.
• Majority vs unanimous decisions.
• Appointment of directors or officers (if incorporated).

5. Intellectual Property

• Clear assignment of all IP created by founders to the company.
• Confidentiality and non-compete provisions.

6. Compensation and Expenses

• Salary or stipend arrangements (if any).
• Reimbursement of approved business expenses.

7. Exits and Disputes

• Resignation, removal or departure of a founder.
• Share transfer or buy-back process.
• Dispute-resolution mechanism (mediation or arbitration).

Legal Requirements

A Co-Founder Agreement is a private contract under English law - not required by statute but enforceable once signed if clear, fair and properly executed.

To ensure validity:

• It must be in writing and signed by all founders.
• All parties should have capacity and intent to form legal relations.
• Independent legal advice is advisable (especially where equity is involved).
• If the company is later incorporated, the terms should align with its Shareholders’ Agreement and Articles of Association.

How to Create a Co-Founder Agreement

Keep it clear, practical and aligned with your long-term business goals.

• List founders and their contributions clearly.
• Agree ownership percentages and vesting terms.
• Define each founder’s role and level of authority.
• Set out decision-making rules and how disputes are handled.
• Include IP and confidentiality clauses to protect assets.
• Plan for exits and buy-outs - think ahead to future changes.
• Sign, date, and store copies securely for all founders.

Robot Lawyer’s guided template helps you create a comprehensive Co-Founder Agreement in minutes, ensuring fairness, compliance and peace of mind from the start.

Cost of a Co-Founder Agreement

Solicitor-drafted agreements typically cost £400–£1,000+, depending on structure and complexity.

With Robot Lawyer, you can create a legally reliable Co-Founder Agreement instantly, built around your business type and ready to download - for a fraction of the cost.

Template Example

Co-Founder Agreement

The example below provides a simple overview of how this type of business agreement is typically structured and the information it usually contains. Actual content may vary depending on your company and legal requirements.

This Agreement is made on [date] between [Founder 1] and [Founder 2] (together “the Founders”).

The Founders agree to collaborate to develop and operate [Business Name] (the “Company”) in accordance with the terms below:

- [Founder 1] will contribute [cash/IP/expertise].
- [Founder 2] will contribute [cash/IP/expertise].
- Ownership of the Company shall be [percentage split].
- All intellectual property created will belong to the Company.
- Major decisions will require [majority/unanimous] approval.

Signed by: [Founder 1 Signature / Date]
[Founder 2 Signature / Date]

Robot Lawyer provides a solicitor-verified Co-Founder Agreement template that outlines roles, responsibilities, equity ownership, intellectual property rights, decision-making processes, vesting and exit arrangements between founders.

Create a professional Co-Founder Agreement — with Robot Lawyer

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Co-Founder Agreement FAQs

Is a Co-Founder Agreement legally binding?
Yes - it’s enforceable as a private contract once signed and dated.

What’s the difference between a Co-Founder Agreement and a Shareholders’ Agreement?
A Co-Founder Agreement is used early, often before incorporation. A Shareholders’ Agreement applies once shares are issued and the company is registered.

Do investors ask to see this?
Yes - early-stage investors often review it to check equity structure, vesting and IP ownership.

Can we change it later?
Yes - you can amend it at any time by mutual consent or replace it with a Shareholders’ Agreement after incorporation.

Get Started

Need a Co-Founder Agreement? Robot Lawyer helps you create a legally valid agreement in minutes - to define your roles, ownership and future clearly.

How it works:

1. Select Create Document → below to begin.
2. Answer a few questions about your business, each founder’s role and your equity split.
3. Receive a solicitor-verified Co-Founder Agreement instantly.
4. Review, sign and share a copy with all founders.

Start the questionnaire to generate your document

✔ Tailored for startups and partnerships
✔ Covers equity, IP, and exit terms
✔ Legally sound, simple and instantly downloadable