Legal issues surrounding Co-founders

  • 1st Mar'21
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Bringing on a Co-Founder 

You need 3 things to create a successful startup: to start with good people, to make something customers actually want, and to spend as little money as possible.

The entrepreneurial journey is both a mixture of exciting stories of success and failure. It is a place where the bucks starts and stops with you. You have a great idea to start a new venture and the theory goes that if you can’t convince at least one other person to join the venture with you, how will you convince customers to buy into your vision and product and service. But in the entire journey, you do need someone else to hop your ideas off of, someone who offers a different perspective at least sometimes, someone who also feels that their success is tied to the venture just as yours is and one such person is known as co-founder.

Must Read: How to avoid the risks faced by small businesses ?


Co-Founders' Agreement

Co-founders are the person who is in charge of developing financial estimates and setting milestones and timelines. A co-founder estimates cost to bring their product to market, develops financial strategies to determine break-even points and ensure long-term solvency, and sets budgets as the corporation grows.

Along with it, a Founders' Agreement is an official contract that is signed between all the co-founders of a firm. Basically, this document states all the responsibilities, ownership, and initial investments made by each of the founders of the company. It includes ownership details along with the roles and responsibilities of each of the co-founders.

Read the links to get complete insights about co-founders' agreement:

Co-Founder agreement:

To get the template of co-founder agreement – short form, Click here

Co-Founder agreement in India:

To read the key points of the agreement for co-founders of startups in India, Click here

How to create a perfect co-founder agreement:

To know about how an apt co founder agreement can be created, Click here

Pitfalls for not having a co-founder agreement:

To know what obstacles not having a co-founder  agreement can pose, Click here


Legal Issues Surrounding Co-Founders

In any startup or a fully established corporation, there are some legal issues surrounding both founder and co-founder. These legal issues need to be taken care of to avoid any sort of problems in the entire working procedure of the organisation.

Visit the links to understand more about legal issues surrounding co-founder

5 reasons why co-founder falls out:

To read about Reasons Why Co-founders Fall Out and why agreements can prove to be a solution, Click here

Top 5 issues of co-founder:

To read about the differences that can arise between co-founders, Click here

Legal documents:

Here are The Top 7 Legal Documents for Every Startup - Click here.


Also Read: First time entrepreneur mistakes

Co-Founder Vesting Agreement

A vesting agreement is an agreement entered in between a corporation and a shareholder that prohibits the vesting of securities with the shareholder over a period of time or subject to other conditions. Typically the shareholder will be allowed to vote the shares but cannot trade them.

Here are some links regarding co-founder vesting agreements. Go through them to know more.

An overview of vesting startup:

To read about vesting for a startup success, Click here

Co-Founder vesting agreement:

To know how to minimise the pain of a co-founder breakup, Click here

Founder Share Vesting:

To know how to get right balance for Founder Share Vesting, Click here

Legal Mistakes Made by Startups

Mostly, it is seen that startups do not comply to the legal aspects and get themselves into legal difficulties because they are not aware of these virtues as the law is like a vast sea in our country with thousand pages act on companies, income, goods and services, employee benefits, information technology, intellectual property etc. Thus, the legal accepts must be glimpsed especially by the entrepreneurs so as to save themselves from committing the same mistakes as others did.

Visit the links to understand what kinds of legal mistakes any startup makes.

15 legal mistakes made by a startup:

To read about the 15 Big Legal Mistakes Made By Startups that can prove to be fatal, Click here

12 biggest legal mistakes:

To know about the legal issues startups can face, Click here

10 legal mistakes made by startups:

To know more about legal mistakes that startups commonly make, Click here


Thinking of starting a business? Here are 2 things you should do before starting a business in 2021.


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About the author: Sareen Yasmin

Her passion includes creative writing, reading and playing around words. She is looking forward to bringing some change with the power of pen and thoughts. Mic and pen are her best friends.


*Note: The content published above was made in collaboration with our members.

About the author:

Akanksha Singh (Editor) , OpenGrowth Content Team

The Editorial Team at OpenGrowth is working to provide you with the perfect place to know everything about startups.

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2022-03-29 06:28:33

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