Whatever the case, it is almost
always emotional, irrational, and
That’s why you should always
prepare a “prenup” for the worst,
when things are the best
All founder teams should have a
heart-to-heart and produce a
signed founders contract at the
outset of any venture
Here are 10 things that you should
discuss and agree upon before
0 1 SHAREHOLDING
How will we divvy up equity, assign
vesting rights, and why? Be
quantitative here. It needs to make
sense. Don’t just split it equally among
friends. You are acting on behalf of the
firm’s best interest here.
0T I2ME AND PRIORITIES
How much time will each of us
explicitly commit to during years 1,
2, & 3?
What are known, acceptable other
priorities (and how will we agree to
What are our shared goals for the
What are each of our SMART
milestones and deliverables (as
defined in a job description)? What
if one of us does not deliver?
0L O4ANS & CASH INJECTION
How much $ will each of us put in?
What if we need a cash injection
from founders mid-stream? Who
pays what, how will we determine
valuation, and what happens if one
of us can’t pay?
How much will everyone be paid?
What happens if we need to adjust
up or down?
What if one of us has an accident, wants to
leave or relocate? Needs to take another job
to survive? What if that other job is
competitive? What if it turns out that we hate
What is expected in terms of leaving? How do
we deal with shareholder loans & shares?
0T IE7 BRAKING
What if we disagree on strategy or
tactics? How do we make a final
0R E8ALITY CHECK
What are each of our known
strengths and weaknesses? What
are we each not prepared to do?
What type of exits are we OK with?
How will we deal with the sale of
shares (see standard shareholder
agreement terms like tag-alongs,
drag-alongs, right of first refusal,
What is the process for dealing with
a breach of these agreements?
But know that if you cannot
candidly discuss these
hypotheticals and agree upon
resolutions when things are good,
then something smells fishy!
Selena Sol asks…..
Please note that all content &
opinions expressed in this deck
are my own and don’t necessarily
represent the position of my
current, or any previous,