Before there are investors, a board, or even revenue, there are founders — and the most damaging disputes in early companies come from arrangements that were never written down. A founders’ agreement sets out who owns what, who does what, how decisions get made, and what happens if a founder leaves. Fauri Law helps founding teams put that foundation in place early, with the clarity that prevents the disputes that sink otherwise-strong companies.
A founders’ agreement is easy to write at the start and painful to write at any other time. While the company is young and everyone is aligned, the terms read as reasonable and get agreed in a conversation. Once the company has value and circumstances have changed, the same questions are worth real money — and settling them is harder, more expensive, and sometimes impossible. The agreement protects the company and the founder relationship at the same time, precisely because it’s written before either is under any strain.
What a founders’ agreement settles
The document records the deal between the people starting the company. We work through the substance of it with you:
The equity split — and the reasoning behind it — so the numbers reflect contribution and commitment, and the thinking is documented, not just the percentages.
Roles and commitment — what each founder is actually putting in, in time and responsibility.
How founders make decisions together — including how decisions get made when founders are evenly split and there’s no natural tiebreaker.
What happens if a founder moves on — addressed calmly now, rather than improvised later.
Vesting: equity that’s earned, not just held
The terms that matter most are usually the ones about a founder leaving. Vesting decides how much equity a founder has truly earned at any point, so a co-founder who departs in year one doesn’t keep a quarter of the company for a few months’ work. We set the vesting schedule, the cliff, and what happens to unvested shares when a founder moves on — so the cap table reflects who actually built the company.
Founder IP belongs to the company
Work a founder does for the venture — the code, the designs, the product itself — needs to be assigned to the company, not held personally. Investors and acquirers check for this, and a gap surfaces at the worst possible moment: in diligence, mid-deal. We put founder IP assignment in place from the start, so what the company runs on is actually owned by the company.
Where it goes next
A founders’ agreement is the early-stage version of what later becomes a full shareholders’ agreement, once you add investors or other shareholders. We draft it so that move is a step forward, not a redo — the founder deal you sign now should still make sense when the cap table grows.
Where the judgment comes in
A clean two- or three-founder agreement is straightforward, and we treat it that way. The judgment is needed when the split is uneven and has to be reasoned through, when a founder brings existing IP or outside commitments into the company, when someone is a non-resident, or when the founding team is larger and the decision-making more involved. That is advisory work, handled directly — the same senior judgment a much larger firm would bring, applied by the lawyer responsible for your matter.
Who we work with
We act for two- and three-founder teams formalizing how they’ll build together, larger founding groups that need a more considered structure, and solo founders putting the right pieces in place before bringing a co-founder in. Whatever the shape of the team, you work with the lawyer handling your matter — from the first conversation through to a signed agreement everyone understands.
How we work
Large-firm experience, boutique focus. The depth of structuring clients would expect from a much larger firm, delivered at a scale where they’re known rather than numbered.
Senior attention, directly. You deal with the lawyer responsible for your matter, not a rotating team.
Scoped, and clear on cost. We tell you what the work involves and what it will cost before it starts; where the setup is standard, we can handle it at a fixed fee.
Built for the long term. The founder deal grows into the cap table everything else rests on. We’d rather get it right with you now than unwind it later.
For a typical two- or three-founder company, the work is well-defined, and we offer the Startup Kit at a fixed fee — covering founder share documentation, a standard founders’ shareholders agreement, and founder IP assignment. Founder structuring that goes beyond the standard is advisory work, and we handle it that way, so a routine setup is done efficiently and an unusual one gets the attention it needs.
How should we split the equity? There’s no formula. A split should reflect what each founder contributed, the risk they took, and what they’re committing going forward — and it should be documented with the reasoning, so it holds up later. We help you think it through and record it properly.
What happens if a co-founder leaves early? Vesting decides how much they’ve earned. We set the schedule, the cliff, and what happens to unvested shares, so an early departure doesn’t leave a large block of dead equity sitting on the cap table.
We’re friends — do we really need this? Yes — and partly because you’re friends. Settling the questions while you’re aligned is what protects both the company and the relationship if anything changes.
How is this different from a shareholders’ agreement? The founders’ agreement is the early-stage version, among founders. A full shareholders’ agreement comes once investors or other shareholders arrive. We draft the first so it leads cleanly into the second.
Does our code and product belong to the company? Only if it’s been assigned. We put founder IP assignment in place so ownership is clear from day one and there’s no gap to find in diligence.
Our recent experience includes complex corporate and transactional mandates involving multi-party negotiations, layered capital structures, and cross-border execution. Representative matters include:
advising on a CAD $2M equity financing for a Toronto-based cybersecurity company.
structuring a CAD $4.5M convertible note financing for a Canadian technology startup.
advising on a USD $5M cross-border equity financing involving international venture structuring.
managing a USD $100M+ ownership restructuring of a venture-led, government-backed aerospace project
Across these engagements, our focus is durability — ensuring that each transaction remains structurally coherent through future financings, governance evolution, and exit scenarios.
Founders agreement vs shareholders agreement
A founders’ agreement is an essential document that sets out various expectations and commitments between the founders in your startup. It serves as a blueprint for how the founders will run a business before they officially begin doing business together.
If you choose to incorporate right away, you may move directly to a more formal shareholders’ agreement, but often with a startup, you’ll want to test the water first before jumping in. Either way, each agreement provides certainty, which is essential at this stage.
Many startups that are looking for external capital funding may rely on a founders’ agreement until their first major round of funding, as the terms of a shareholders’ agreement will typically be heavily negotiated by the investors
What should be included in a Founders’ Agreement?
While there’s no formal structure for a founders agreement, here are some things you should consider including in your agreement:
Who owns what percentage of the business?
Is the ownership percentage subject to vesting on the basis of continued business involvement and performance?
Who owns the intellectual properties?
Who is responsible for what?
Have any of the founders invested assets or cash in the company, and if so, when and how will it be accounted for?
If the founder leaves the company for whatever reason, does he or she have to return their shares to the company or to the other founders?
At what price is this sale going to take place?
Is a Founders agreement legally binding?
The founders’ agreement is a legally binding contract that should encapsulate everything that is important to your business. You don’t want to rely on verbal agreements or rely on form documents – you want the agreement to memorialize the essential elements of your organization.
Do we need a Founders Agreement?
When people come together to form a business, there is often an atmosphere of optimism and excitement. The founders often have a clear sense of their roles, objectives, and ultimately what they will get out of the business. All of this may have been discussed at length, but in the absence of a written agreement, problems can arise in the future – problems that can ultimately jeopardize your business.
A clear founders’ agreement is vital to the future success of your business.
Before there are investors, a board, or even revenue, there are founders — and the most damaging disputes in early companies come from arrangements that were never written down. A founders’ agreement sets out who owns...
Before there are investors, a board, or even revenue, there are founders — and the most damaging disputes in early companies come from arrangements that were never written down. A founders’ agreement sets out who owns...
Before there are investors, a board, or even revenue, there are founders — and the most damaging disputes in early companies come from arrangements that were never written down. A founders’ agreement sets out who owns...
Before there are investors, a board, or even revenue, there are founders — and the most damaging disputes in early companies come from arrangements that were never written down. A founders’ agreement sets out who owns...
Before there are investors, a board, or even revenue, there are founders — and the most damaging disputes in early companies come from arrangements that were never written down. A founders’ agreement sets out who owns...
Before there are investors, a board, or even revenue, there are founders — and the most damaging disputes in early companies come from arrangements that were never written down. A founders’ agreement sets out who owns...
Before there are investors, a board, or even revenue, there are founders — and the most damaging disputes in early companies come from arrangements that were never written down. A founders’ agreement sets out who owns...
Before there are investors, a board, or even revenue, there are founders — and the most damaging disputes in early companies come from arrangements that were never written down. A founders’ agreement sets out who owns...
Before there are investors, a board, or even revenue, there are founders — and the most damaging disputes in early companies come from arrangements that were never written down. A founders’ agreement sets out who owns...
Before there are investors, a board, or even revenue, there are founders — and the most damaging disputes in early companies come from arrangements that were never written down. A founders’ agreement sets out who owns...
Before there are investors, a board, or even revenue, there are founders — and the most damaging disputes in early companies come from arrangements that were never written down. A founders’ agreement sets out who owns...
Before there are investors, a board, or even revenue, there are founders — and the most damaging disputes in early companies come from arrangements that were never written down. A founders’ agreement sets out who owns...
Before there are investors, a board, or even revenue, there are founders — and the most damaging disputes in early companies come from arrangements that were never written down. A founders’ agreement sets out who owns...
Before there are investors, a board, or even revenue, there are founders — and the most damaging disputes in early companies come from arrangements that were never written down. A founders’ agreement sets out who owns...
Before there are investors, a board, or even revenue, there are founders — and the most damaging disputes in early companies come from arrangements that were never written down. A founders’ agreement sets out who owns...
Before there are investors, a board, or even revenue, there are founders — and the most damaging disputes in early companies come from arrangements that were never written down. A founders’ agreement sets out who owns...
Before there are investors, a board, or even revenue, there are founders — and the most damaging disputes in early companies come from arrangements that were never written down. A founders’ agreement sets out who owns...
Before there are investors, a board, or even revenue, there are founders — and the most damaging disputes in early companies come from arrangements that were never written down. A founders’ agreement sets out who owns...
Before there are investors, a board, or even revenue, there are founders — and the most damaging disputes in early companies come from arrangements that were never written down. A founders’ agreement sets out who owns...
Before there are investors, a board, or even revenue, there are founders — and the most damaging disputes in early companies come from arrangements that were never written down. A founders’ agreement sets out who owns...
Before there are investors, a board, or even revenue, there are founders — and the most damaging disputes in early companies come from arrangements that were never written down. A founders’ agreement sets out who owns...
Before there are investors, a board, or even revenue, there are founders — and the most damaging disputes in early companies come from arrangements that were never written down. A founders’ agreement sets out who owns...
Before there are investors, a board, or even revenue, there are founders — and the most damaging disputes in early companies come from arrangements that were never written down. A founders’ agreement sets out who owns...
Before there are investors, a board, or even revenue, there are founders — and the most damaging disputes in early companies come from arrangements that were never written down. A founders’ agreement sets out who owns...
Before there are investors, a board, or even revenue, there are founders — and the most damaging disputes in early companies come from arrangements that were never written down. A founders’ agreement sets out who owns...
