Why You Need This BEFORE Building Anything
Every startup lawyer in Miami will tell you the same thing: the co-founder agreement is the most important document you'll ever sign, and the one most founders skip. They skip it because the conversation feels uncomfortable. Who gets what percentage? What happens if someone leaves? What if we disagree?
These conversations are easy when everyone is excited and aligned. They become impossible during a crisis. A co-founder agreement forces you to have these conversations while you still like each other.
We've seen it firsthand in our venture studio practice: the startups that survive co-founder conflict are the ones that planned for it. The ones that don't plan for it either dissolve or spend six figures on lawyers trying to sort out who owns what.
Here's the horror story we hear most often: two friends build a product together. One does most of the technical work. The other handles business development. After 18 months, the business partner loses interest and takes a corporate job. They still own 50% of the company. The technical founder can't raise money because no investor will fund a company where a phantom co-founder owns half. The company dies. This is preventable with a co-founder agreement.
The Template
This template covers the 10 essential clauses. Customize the bracketed sections for your specific situation.
This Co-Founder Agreement ("Agreement") is entered into as of [Date] by and among the following individuals (each a "Founder" and collectively the "Founders"):
[Founder 1 Full Name], residing at [Address]
[Founder 2 Full Name], residing at [Address]
in connection with the formation and operation of [Company Name] (the "Company"), a [State] [LLC/Corporation].
[Founder 1] shall serve as [CEO/CTO/CPO] and shall be primarily responsible for [describe key responsibilities, e.g., "product development, technical architecture, and engineering team management"].
[Founder 2] shall serve as [CEO/COO/CMO] and shall be primarily responsible for [describe key responsibilities, e.g., "business development, sales, fundraising, and operations"].
Role changes require unanimous written consent of all Founders.
The Founders shall hold equity in the Company as follows:
[Founder 1]: [X]%
[Founder 2]: [X]%
All equity is subject to the vesting schedule described in Section 3.
Each Founder's equity shall vest over a period of [4 years] with a [1-year] cliff. No equity shall vest during the first [12 months]. Upon completion of the cliff period, [25%] of each Founder's total equity shall vest. Thereafter, the remaining equity shall vest in equal monthly installments over the following [36 months].
In the event of a Change of Control (acquisition or merger), [100% / 50%] of each Founder's unvested equity shall immediately vest (single/double trigger acceleration).
Each Founder hereby assigns to the Company all right, title, and interest in and to any and all inventions, works of authorship, designs, code, know-how, ideas, and other intellectual property that the Founder creates, conceives, or develops, either solely or jointly with others, in connection with the Company's business, both before and after the date of this Agreement. Each Founder agrees to execute any documents necessary to perfect the Company's ownership of such intellectual property.
Day-to-day decisions within each Founder's area of responsibility shall be made by that Founder independently. Major decisions require unanimous consent of all Founders. Major decisions include: (a) spending over $[amount]; (b) hiring or firing employees; (c) taking on debt or issuing equity; (d) entering contracts exceeding $[amount] or [12 months] in duration; (e) pivoting the core product or business model; (f) any legal action.
Voluntary Departure: If a Founder voluntarily leaves the Company, they retain their vested equity. Unvested equity is forfeited and returned to the Company. The Company shall have the right (but not the obligation) to repurchase the departing Founder's vested equity at fair market value, payable over [12 months].
Termination for Cause: If a Founder is terminated for cause (material breach, fraud, conviction of a felony), all unvested equity is forfeited and the Company may repurchase vested equity at the lower of fair market value or original issue price.
During the term of this Agreement and for a period of [1 year] following departure, each Founder agrees not to: (a) engage in any business that directly competes with the Company within [geographic scope]; (b) solicit, hire, or attempt to hire any employee or contractor of the Company; (c) solicit any customer or client of the Company.
Each Founder commits to dedicating [full-time / minimum X hours per week] to the Company. No Founder shall engage in any outside employment, consulting, or business activity that conflicts with the Company's interests without prior written consent of the other Founder(s). Side projects unrelated to the Company's business are permitted with disclosure.
Until the Company generates revenue of at least $[amount]/month or raises external funding of at least $[amount], Founders shall not receive salary. Business expenses over $[amount] require consent of all Founders. Once funding or revenue permits, Founder salaries shall be set by mutual agreement and shall be equal unless the Founders unanimously agree otherwise.
In the event of a dispute between Founders that cannot be resolved through direct negotiation within [30 days], the Founders agree to submit the dispute to mediation administered by [mediation service, e.g., JAMS or AAA] in [City, State, e.g., Miami, Florida]. If mediation fails, the dispute shall be resolved by binding arbitration in accordance with the rules of [arbitration body]. The prevailing party shall be entitled to recover reasonable attorneys' fees.
Governing Law: This Agreement shall be governed by the laws of the State of [State, e.g., Florida].
Entire Agreement: This Agreement constitutes the entire agreement between the Founders and supersedes all prior discussions and agreements.
FOUNDER 1:
Signature: ___________________________
Name: [Full Name]
Date: ___________________________
FOUNDER 2:
Signature: ___________________________
Name: [Full Name]
Date: ___________________________
The Vesting Conversation
Vesting is the single most important protective mechanism in a co-founder agreement. Without it, a co-founder who leaves after two months walks away with their full equity stake while contributing nothing going forward. That's not a theoretical risk -- we've seen it happen multiple times with startups in the Miami ecosystem.
The standard 4-year vesting with a 1-year cliff works like this: nobody earns any equity in the first year. This is the "dating period." If things aren't working out, either co-founder can leave without a messy equity situation. After one year, 25% vests immediately. Then the remaining 75% vests monthly over the next 36 months.
Some founders resist vesting because they feel it implies distrust. It doesn't. It implies maturity. Every major accelerator, every VC, and every venture studio will require vesting as a condition of investment or partnership. Getting it set up from day one saves you from having to retroactively impose it when an investor demands it.
IP Assignment: Why It's Non-Negotiable
If you write code for the company on your personal laptop, who owns that code? If you design the logo before the company is formally incorporated, who owns the design? Without an IP assignment clause, the answer is murky -- and murky is expensive.
The IP assignment clause ensures that everything created for the company belongs to the company. This is critical for fundraising (investors will ask), for acquisition (acquirers will require it), and for basic operational clarity. Every founder should sign an IP assignment as part of the co-founder agreement. No exceptions.
If you're also working with external developers or designers, make sure they sign a contractor agreement with its own IP assignment clause. And if you're sharing proprietary information during the co-founder exploration phase, use a mutual NDA until the co-founder agreement is in place.
Don't Skip This Document
The co-founder agreement is not a document you sign and file away. It's the operating manual for your most important business relationship. Review it quarterly. Update it as roles evolve. Reference it when disagreements arise. Every startup attorney in Miami -- and everywhere else -- will tell you that the cost of a co-founder agreement ($500-$2,000 with a lawyer) is a fraction of the cost of a co-founder dispute ($50,000-$500,000 in litigation, or the entire company).
Ready to build? Reach out to our team or explore our venture studio partnership model.