Y Combinator Founders Agreement

 
 

When valuable intellectual property is used in connection with its ownership, disagreements may arise. If it was created before the company was set up, there may be confusion as to whether the intellectual property belongs to the person or the company. It is important to determine this in advance and include intellectual property assignment PROVISIONS in your agreement. Our updated safes are therefore “post-money” safes. By “post-money” we mean that the ownership of safe holders is measured after (post) all the safe money has been settled – which is now its own turn – but always before (before) the new money in the price round that converts and dilutes the safes (usually the A series, but sometimes the Seed series). The post-money vault has what we think is a huge advantage for founders and investors – the ability to instantly and accurately calculate how much of the company`s property has been sold. It`s crucial for founders to understand how much dilution is caused by each vault they sell, just as it`s fair for investors to know how much of the company`s property they bought. I found the SAFE agreements, and Clerky has a number of ISO/Options agreements. But are there any recommended models for the first agreement between founders when forming a Delaware Corp? A start-up contract performs several important functions. At the most basic level, it defines the roles, responsibilities and rights of founders. It gives the co-founders the opportunity to negotiate a common vision. Perhaps more importantly, it provides a way to resolve future contentious issues.

There are many useful online resources to help you start creating a founder`s agreement with standard terms and conditions. But don`t rush the process. Schedule ongoing conversations and document your expectations in writing, especially if there are areas where you and your co-founder disagree. Most founders make decisions based on their experiences, roles, and expectations. Sometimes the outlook doesn`t match. The lack of a decision-making channel can lead to conflict. For example, a technical co-founder may set a one-year goal for product development, while a business-oriented co-founder may want to assure investors that the product will be ready in 6 months. Who has the right to overturn which decision if the decisions affect the same pool of resources? Founders often ask how to share equity with their co-founders.

When I do research on the Internet on this topic, I often see terrible advice that usually advocates significant inequality between the different members of the founding team. We see this trend in the thousands of applications we review each year at Y Combinator. Startups are all about implementation, not ideas. Dramatically unequal seed capital allocations often give the co-founder who originally came up with the idea for the startup an inappropriate preference, unlike the founders of small groups who launched the product and generated the initial traction. Most founders choose to divide equity equally or calculate a percentage of the equity allocation based on each co-founder`s contributions. There are many approaches and methods for calculating equity. But the calculation of percentages is very subjective. Calculations are often based on past contributions from founders – many of whom overser – and expected future contributions, which are impossible to predict accurately. Another innovation of the vault concerns a “proportionate” duty. The original vault required the Company to allow vault holders to participate in the funding round after the funding round into which the vault was converted (p.B. if the vault were converted into Series A preferred share financing, a security holder – now holding a series A sub-series preferred share – would be allowed to purchase a proportionate portion of the Series B preferred shares).

.

Comments are closed

Sorry, but you cannot leave a comment for this post.