# Co Founder Partner Agreements

> SKILL 71: Co-Founder & Partner Agreements

- Skill: `nickgallick/co-founder-partner-agreements` (Agent Skill)
- Install (CLI): `npx skillmds@latest add nickgallick/co-founder-partner-agreements`
- Raw SKILL.md: https://api.skillmd.com/api/skills/nickgallick/co-founder-partner-agreements/raw
- Safety review: pending (external: skill-scanner PASS, skillspector PASS)
- Works with: Claude Code, Claude.ai, OpenAI Codex
- Category: Coding & Dev Tools
- Author: nickgallick (https://skillmd.com/u/nickgallick)
- Updated: 2026-09-21
- Page: https://skillmd.com/skills/nickgallick/co-founder-partner-agreements

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# SKILL 71: Co-Founder & Partner Agreements

## Purpose
The #1 startup killer is co-founder disputes. The right legal documents, executed before a line of code is written, prevent most of them.

## Founders' Agreement (Pre-Incorporation)
A simple document covering the essentials before the entity is formed:
- Who contributes what: money, labor, IP, connections, time commitment
- Initial equity split and basis for the split
- Vesting schedule (see below)
- IP assignment: all work done for the venture belongs to the venture
- What happens if someone wants to leave
- Decision-making: who has final authority on what?

**Do this BEFORE writing any code or spending any money.**

## Operating Agreement (LLC) or Bylaws + Stockholders Agreement (C-Corp)

### Governance
- Decision-making authority: who can bind the company?
- Voting thresholds: simple majority vs. supermajority for specific decisions
- Board composition: how many members, how elected, how removed
- Manager/officer roles: CEO authority vs. board authority

### Equity
- Initial allocation: percentage ownership at formation
- Vesting schedule (see below — non-negotiable)
- Dilution on future fundraising: pro-rata rights to maintain ownership percentage

### Distributions (LLC) / Dividends (C-Corp)
- When and how profits are distributed
- Minimum tax distributions (for LLCs: distributions to cover members' tax liability)
- Board discretion on timing and amount

### Transfer Restrictions
- Can a co-founder sell their shares? To whom?
- Right of first refusal (ROFR): company gets the right to buy before any third party
- Co-sale right (drag-along/tag-along): if one founder sells, others can join the sale
- Company repurchase right on departure

### Deadlock Resolution
- If 50/50 co-founders reach an impasse:
  1. 30-day cooling off period
  2. Mediation (neutral mediator)
  3. Binding arbitration
  4. Buy-sell mechanism (Texas Shootout: one party sets price, other chooses to buy or sell at that price)

### Non-Compete
- Scope: specifically in the company's defined business
- Duration: during involvement + 12–24 months after departure
- Geography: US (or wherever the company operates)
- Enforceability: Iowa enforces non-competes if reasonable in scope/duration/geography
- Note: California does NOT enforce non-competes — if a co-founder is based in CA, this may be unenforceable

## Vesting — NON-NEGOTIABLE FOR ALL EQUITY HOLDERS

### Standard Terms
- **Schedule**: 4 years total, 1-year cliff
- **The cliff**: zero vesting for the first 12 months. Leave in month 11: zero equity.
- **After the cliff**: monthly vesting (1/48th per month for remaining 36 months)
- **Result**: co-founder who leaves at month 18 keeps 18/48 = 37.5% of their grant

### Acceleration
- **Single-trigger**: all shares vest immediately upon acquisition
  - Protects the individual; more expensive for acquirer
  - Appropriate for: CEO/founder who drove the exit
- **Double-trigger**: shares vest only if acquired AND person is terminated without cause within 12 months
  - Protects the company/acquirer; standard for non-CEO employees
  - Recommendation: single-trigger for Nick (CEO), double-trigger for everyone else

### Founder Vesting (Yes, Even Founders Vest)
- Founders must vest. A co-founder who leaves after 3 months with 50% of the company is a company-killer.
- Common objection: "I started this company, why should I vest?"
- Answer: "Because if you leave tomorrow, you shouldn't take half the company with you. Vesting proves your commitment."
- VC requirement: ALL investors will require founder vesting before investing

## IP Assignment Agreement
**Sign with EVERYONE who touches the product. No exceptions.**

Required signatories:
- All founders (at incorporation)
- All employees (at hire)
- All contractors (before first deliverable)
- All advisors (before first engagement)

### Required Provisions
1. Assignment of all IP created in connection with the company to the company
2. Covers: code, designs, inventions, trade secrets, content, processes, improvements
3. Includes work done before the formal agreement IF done for the company's benefit
4. Pre-existing IP: list anything retained by the individual (Nick's personal tools, prior inventions)
5. Moral rights waiver (relevant for non-US IP)
6. Power of attorney: the company can register IP in the person's name without their further signature if they're unavailable

**Without this**: each person could claim they own their contributions. In acquisition due diligence, missing IP assignments kill deals or dramatically reduce price.

## Advisor Agreements
- **Typical equity**: 0.25%–1.0% with 2-year vesting, monthly, no cliff
- **FAST Agreement**: Founder Advisor Standard Template (fi.co/FAST) — industry standard, freely available
- **Advisor provides**: introductions, strategic guidance, industry expertise — NOT day-to-day work
- **Advisory board ≠ Board of Directors**: advisors have no fiduciary duty, no legal authority, no liability
- **Cap on advisors**: don't give out advisory equity casually. 5–7 advisors maximum before it starts to look like equity is being used as currency.

## Early Employee Equity
- **First 5 employees**: typically 0.5%–2.0% each with 4-year vesting
- **Option pool**: reserve 10–20% of total shares before first raise (standard for VC-backed companies)
- **ISOs vs. NSOs**: Incentive Stock Options (ISOs) for employees (favorable tax treatment); Non-Qualified Stock Options (NSOs) for contractors and advisors
- **83(b) election**: for restricted stock grants (not options). File within 30 DAYS of grant. Miss this deadline: NEVER fixable. Set a calendar reminder the day of every grant.
- **Token allocation**: separate from equity. Specify in employment agreement if the company has or plans to have a token.

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*This is legal research and intelligence, not legal advice. Consult qualified legal counsel before taking action.*