Co-founders Agreement
The agreement that saves startups — equity, vesting, roles and exit terms settled before disputes can start.
- Dispute-Proof Equity Split
- Vesting with Cliff
- IP Owned by the Company
What is Co-founders Agreement?
Co-founder disputes kill more startups than competition does — and almost all of them trace back to things never put in writing: who owns how much, what happens when someone leaves, who decides what, and who owns the IP. A Co-founders Agreement settles all of it while everyone is still friends.
Taxwapsi's startup lawyers draft a comprehensive agreement covering equity split and vesting (typically 4 years with a 1-year cliff), roles and responsibilities, decision-making and deadlock resolution, IP assignment to the company, confidentiality and non-solicitation, founder exit scenarios (good leaver/bad leaver), and transfer restrictions like right of first refusal.
The vesting and IP clauses alone are critical for fundraising — investors routinely walk away from startups where a departed co-founder holds 30% dead equity or personal ownership of the core code. We draft it investor-ready from day one.
Expert Pro Tip
Put founder vesting in place BEFORE incorporation or your first cheque — retro-fitting vesting after a co-founder leaves with full equity is legally messy and the #1 cap-table problem investors flag in due diligence.
Choose Your Package
Transparent pricing — professional fee shown, government fees extra where noted.
Starter
Standard co-founders agreement (2 founders).
All Inclusive
Get StartedWhat you'll get
- Equity & vesting structure
- IP assignment clause
- Roles & decision rights
- Exit & buyback terms
- 2 rounds of revisions
Standard
Custom agreement + alignment session (up to 4 founders).
All Inclusive
Get StartedWhat you'll get
- Everything in Starter
- Founder alignment session with lawyer
- Good/bad leaver definitions
- Deadlock resolution mechanism
- AOA alignment checklist
- 3 rounds of revisions
Pro
Agreement + ESOP pool + investor-readiness pack.
All Inclusive
Get StartedWhat you'll get
- Everything in Standard
- ESOP pool structuring advice
- Founder IP assignment deeds (individual)
- Cap table template & guidance
- SHA-readiness review at funding
- Dedicated startup lawyer
* Timelines depend on government processing. T&C apply.
Benefits of Co-founders Agreement
Dispute-Proof Equity Split
Ownership, contribution expectations and future dilution documented — the conversation most founders avoid until it explodes.
Vesting with Cliff
4-year vesting with 1-year cliff (or your custom schedule) so equity is earned, not gifted to early leavers.
IP Owned by the Company
Every line of code, design and idea assigned to the company — not stuck with individual founders.
Clear Decision Rights
Day-to-day vs reserved matters, voting thresholds and deadlock-breaking mechanisms defined.
Exit Scenarios Covered
Good leaver/bad leaver terms, buyback rights, ROFR and non-compete-adjacent protections on departure.
Investor-Ready Structure
Drafted to survive VC due diligence — clean cap table, vesting and IP chain from day one.
How It Works — Step by Step
- 1
Founders Alignment CallDay 1
Structured discussion covering equity, roles, vesting and exits — we ask the hard questions now.
- 2
Term Sheet SummaryDay 2
Agreed terms summarised in plain language for all founders to confirm before drafting.
- 3
Agreement DraftingDay 3–4
Full agreement drafted: equity, vesting, IP assignment, governance, exit and restrictive covenants.
- 4
Review & RevisionsDay 5
All founders review; revisions incorporated (2 rounds included).
- 5
Execution & Next StepsDay 6
Stamping/signing guidance, plus alignment with your SHA/AOA when you incorporate or raise.
Documents Required
Prepare your documents in the order below — start with Document 1 and move down the list.
Founder Details
- 1
Founder KYCRequired
PAN/Aadhaar of each founder.
- 2
Proposed Equity SplitRequired
Current thinking on percentages (we stress-test it with you).
- 3
Roles & Time CommitmentRequired
Full-time/part-time status and functional ownership of each founder.
Company Context
- 4
Company Details (if incorporated)If applicable
CIN, shareholding pattern, AOA — for consistency.
- 5
Existing IP DescriptionRequired
Code, brand, content already created and by whom — for the assignment clause.
- 6
Capital ContributionsIf applicable
Money or assets each founder has put in or committed.
Frequently Asked Questions
When should we sign a co-founders agreement?
The day you commit to building together — even before incorporation. Pre-incorporation, it binds the founders personally; on incorporation, key terms flow into the AOA and later the SHA. The cost of signing late is measured in dead equity and lawsuits.
What is vesting and why the 1-year cliff?
Vesting means founders earn their equity over time (typically 4 years). The cliff means nothing vests in the first year — a founder leaving in month 9 takes nothing. It protects everyone from the co-founder who leaves early but keeps a fat stake.
What happens to a departing founder's equity?
Unvested shares lapse or are bought back at nominal value. Vested shares are typically subject to company/founder buyback rights — at fair value for a "good leaver" (health, agreed exit) and at discount/nominal for a "bad leaver" (cause, breach). We draft both definitions tightly.
How should we split equity?
There is no formula, but the drivers are: idea origination, full-time commitment, capital contributed, experience/network, and replaceability. Equal splits work when contributions are genuinely equal — we facilitate the structured conversation so the split is deliberate, not default.
Is a co-founders agreement legally binding in India?
Yes — it is a contract under the Indian Contract Act. Share-transfer mechanics are strongest when mirrored in the company's AOA (private company share-transfer restrictions are enforceable under the Companies Act). We flag exactly which clauses should go into your AOA.
Can we include a non-compete?
During the engagement, yes. Post-exit non-competes are generally unenforceable in India (Section 27, Contract Act) — so we use enforceable alternatives: confidentiality, non-solicitation of employees/customers, IP assignment and garden-leave style structures.
What about a founder's salary?
The agreement can record remuneration philosophy (equal/role-based, deferred until funding) and how changes are approved. This prevents the silent resentment that builds when one founder draws salary and another doesn't.
How does this interact with a future shareholders agreement?
On a funding round, the SHA with investors typically supersedes founder arrangements — but your vesting, IP and leaver terms carry forward and are exactly what investors check. A clean co-founders agreement makes the SHA negotiation faster and cheaper.
What Our Clients Say
4.6/5(2,000+ reviews)Our trademark got objected and we were clueless. Their IP attorney drafted a brilliant reply — mark accepted and published within months.
My freelancer agreement now has milestone payments and IP-on-full-payment. A client who used to delay invoices paid in 4 days this time.
My Pvt Ltd was registered in 12 days flat. Every step explained, pricing exactly as quoted, and the post-incorporation kit covered everything. Highly recommended.
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