A cofounder agreement should include nine clauses: roles, the equity split, a vesting schedule, IP assignment, decision rights, pay and time commitment, confidentiality and non-compete, exit and buyout terms, and dispute resolution. Write them down and sign before you build much together. Most founder fights start with two people who assumed different things.
Why write it down if you trust each other?
Because trust does not stop you assuming different things. One founder thinks the split is earned over time, the other thinks it was fixed on day one. Neither is lying. They never said it out loud. The agreement makes you say it.
What clauses go in a cofounder agreement?
These nine. If you cannot fill in a row, that is the conversation to have now.
| # | Clause | What it settles | What happens if you skip it |
|---|---|---|---|
| 1 | Roles | Who owns which area and decision | Overlap turns into power struggles |
| 2 | Equity split | Each founder's percentage and why | The most common source of resentment |
| 3 | Vesting | How and when equity is earned | A founder leaves in month three and keeps a share |
| 4 | IP assignment | The company owns work done before and after incorporation | Investors walk away in due diligence |
| 5 | Decision rights | What one founder decides alone and what needs both | Deadlock at the worst moment |
| 6 | Pay and time | Salaries, full-time or part-time | "I thought you were all in" |
| 7 | Confidentiality and non-compete | What stays inside, what a leaver cannot take | A leaver takes your roadmap and your hires |
| 8 | Exit and buyout | Leaving, removal, buyback price, good and bad leaver | Nobody knows the cost until it happens |
| 9 | Dispute resolution | Mediation, arbitration or a tie-breaker | A 50/50 company freezes |
How should you handle equity, vesting and IP?
Write the reasons, use a cliff and assign the IP. These three do the most damage when they are vague.
State each founder's percentage and why. See how to split cofounder equity.
The standard vesting schedule is four years with a one-year cliff. A founder earns nothing until month twelve, then vests the rest over three years, and the company can buy back unvested shares if they leave (Failory). See cofounder vesting schedules explained.
Under US copyright law, work belongs by default to the person who made it, not the company. The agreement needs an express IP assignment for work done before and after incorporation (EquityList).
How do you set decision rights?
List what each founder decides alone, then the reserved matters that need both of you, such as a raise, a key hire or a sale. Set the threshold: majority, supermajority or unanimous. In a 50/50 company, add a tie-breaker before you need one. Reserved matters with no way out of deadlock are how a company freezes (EquityList). If you are already stuck, read our cofounder conflict resolution guide.
What should the exit clause say?
How shares are handled when a founder leaves, the buyback price, and who counts as a good or bad leaver. Those terms have no legal meaning in the US until you define them (EquityList). Also write down who is full-time and when that changes.
How do you draft it?
- Start from a template. Our founders agreement templates give you the clauses.
- Fill in your terms together, row by row.
- Have a lawyer review it. Equity, vesting and IP often need supporting documents.
- Sign before incorporation or as soon after as you can.
- Keep the working agreement current. A Blueprint records who owns what, how you decide and what happens if someone leaves, signed by both of you. See how it works.
Frequently asked questions
- What should a cofounder agreement include?
- A cofounder agreement should cover roles, the equity split, a vesting schedule, IP assignment, who decides what, pay and time commitment, confidentiality and non-compete terms, what happens when a founder leaves, and how you settle a deadlock. Each clause turns something you assumed into something written you can point to later.
- Do you need a cofounder agreement if you trust your cofounder?
- Yes. Trust is why you started together, and it does not replace written terms. The agreement protects the relationship by making expectations clear before money, equity or a departure put them under pressure. Write it while you agree with each other, because writing it during an argument is much harder.
- Is a founders agreement legally binding?
- A properly signed founders agreement is a binding contract, and courts generally enforce its terms. Equity, vesting and IP often also need supporting documents, such as a Restricted Stock Purchase Agreement and a formal IP assignment, to fully take effect. Have a lawyer review the agreement before both founders sign.
- When should cofounders sign an agreement?
- As early as you can, ideally at or before incorporation and before much work or IP exists. Signing early keeps the equity clean, starts vesting on day one and assigns earlier work to the company. Every month you wait makes the conversation harder, because more has already been built and assumed.
- What is the difference between a founders agreement and an operating agreement?
- A founders agreement covers the relationship between co-founders: roles, equity, vesting and exits. An operating agreement or company bylaws cover the legal entity and its members or shareholders. Many terms overlap, so a lawyer should check that the two documents say the same thing before you sign either one.