Co-founder agreement template (equity, vesting, roles, IP)
VC-ready co-founder agreement template covering equity split, 4-year vesting with 1-year cliff, role decision rights, IP assignment, and buyback terms.
co-founder-agreement-template.txt
CO-FOUNDER AGREEMENT
This Co-Founder Agreement ("Agreement") is entered into on {{effective_date}} by and between {{founder_1_full_name}} ("Founder 1") and {{founder_2_full_name}} ("Founder 2"), collectively the "Founders," in connection with the formation and operation of {{company_name}} (the "Company"), a {{company_jurisdiction}} corporation.
1. EQUITY SPLIT
The Founders agree the initial common stock of the Company shall be issued as follows:
- Founder 1: {{founder_1_equity_pct}}% ({{founder_1_shares}} shares)
- Founder 2: {{founder_2_equity_pct}}% ({{founder_2_shares}} shares)
Rationale for split (preserved for cap-table memory): {{equity_split_rationale}}
An option pool of {{option_pool_pct}}% will be reserved for future hires, to be created at or before the Company's first priced equity financing.
2. VESTING (REVERSE VESTING)
All Founder shares are subject to a {{vesting_total_years}}-year vesting schedule with a {{cliff_months}}-month cliff, measured from {{vesting_start_date}}. If a Founder ceases to provide services before the cliff date, 100% of that Founder's shares are subject to repurchase by the Company at the lower of original purchase price or fair market value. After the cliff, shares vest {{post_cliff_vesting_frequency}} over the remainder of the term.
Each Founder shall file an 83(b) election with the IRS within 30 days of share issuance.
3. ROLES AND DECISION RIGHTS
- CEO: {{ceo_name}}. Final authority over hiring/firing, fundraising lead, external communications, and any decision not specifically reserved below.
- {{founder_2_role_title}}: {{founder_2_name}}. Final authority over {{founder_2_decision_domain}}.
- Joint decisions (require unanimous Founder consent): annual budget, issuance of new equity, taking on debt over ${{debt_threshold_usd}}, hiring any executive, M&A or sale of the Company, dissolution.
4. IP ASSIGNMENT
Each Founder hereby assigns to the Company all right, title, and interest in any intellectual property, inventions, code, designs, trademarks, or work product created by such Founder, whether before or after the date of this Agreement, that relates to the Company's business as defined in Section {{ip_scope_section}}. This assignment is present-tense and effective immediately upon execution.
Each Founder represents they have no pre-existing obligations to a prior employer or third party that would conflict with this assignment, except as disclosed in Exhibit A.
5. CONFIDENTIALITY
Each Founder agrees to maintain in confidence all non-public information of the Company, including code, customer lists, financial data, and strategic plans, during their service and for {{confidentiality_term_years}} years thereafter.
6. DEPARTURE AND REPURCHASE
If a Founder ceases to provide services for any reason (voluntary departure, termination for cause, termination without cause, death, or disability):
- Unvested shares: repurchased by the Company at original purchase price.
- Vested shares: {{vested_repurchase_treatment}}.
- Departing Founder is removed from the Board immediately and resigns all officer positions.
- Departing Founder remains bound by Sections 4 (IP), 5 (Confidentiality), and 7 (Non-Solicit) for {{post_departure_restriction_years}} years.
7. NON-SOLICITATION
For {{non_solicit_years}} years following departure, a departing Founder will not solicit employees, contractors, or customers of the Company.
8. DISPUTE RESOLUTION
Disputes between Founders are first escalated to a 30-day good-faith mediation. If unresolved, binding arbitration in {{arbitration_venue}} under {{arbitration_rules}}.
9. AMENDMENT
This Agreement may only be amended in writing signed by both Founders. Note: once the Company has accepted institutional capital, material changes to vesting, repurchase, or IP terms typically require investor consent under the financing documents.
10. ACKNOWLEDGMENT
Each Founder acknowledges they have had the opportunity to consult independent legal counsel and signs voluntarily.
Signed:
___________________________ Date: __________
{{founder_1_full_name}}
___________________________ Date: __________
{{founder_2_full_name}}
Variables · fill before sending
- effective_dateDate the agreement is signed, e.g., 2026-06-21
- founder_1_full_nameLegal name of Founder 1 as it will appear on the cap table
- founder_2_full_nameLegal name of Founder 2
- company_nameLegal entity name, e.g., 'Acme AI, Inc.'
- company_jurisdictionState or country of incorporation, e.g., 'Delaware' or 'England & Wales'
- founder_1_equity_pctFounder 1's percentage of issued common stock (pre-option-pool)
- founder_2_equity_pctFounder 2's percentage of issued common stock
- founder_1_sharesFounder 1's share count, e.g., 4,500,000
- founder_2_sharesFounder 2's share count, e.g., 4,500,000
- equity_split_rationaleOne sentence on why this split, e.g., 'equal split reflecting equal time, capital, and risk contribution at formation'
- option_pool_pctReserved option pool, typically 10% pre-seed, 15% before seed
- vesting_total_yearsStandard is 4
- cliff_monthsStandard is 12
- vesting_start_dateUsually the formation date or the date work began, whichever is earlier
- post_cliff_vesting_frequency'monthly' is standard; 'quarterly' is acceptable but worse for the founder
- ceo_nameWhich Founder is CEO. Pick now, do not 'co-CEO' it
- founder_2_role_titleCTO, COO, Chief Product Officer, etc.
- founder_2_nameSame name as founder_2_full_name (short reference)
- founder_2_decision_domainTheir domain of final authority, e.g., 'technical architecture, engineering hiring, infrastructure spend'
- debt_threshold_usdDollar amount above which debt requires joint consent, e.g., 25,000
- ip_scope_sectionCross-reference to a recitals or schedule defining the business scope. If none, write 'the Recitals'
- confidentiality_term_years5 is common; trade-secret-heavy businesses use 'in perpetuity for trade secrets'
- vested_repurchase_treatmentEither 'retained by the departing Founder' (founder-friendly) or 'subject to Company right of first refusal on any transfer' (investor-friendly, recommended)
- post_departure_restriction_years2 years is standard
- non_solicit_years1 to 2 years; longer is unenforceable in California
- arbitration_venueCity and state, e.g., 'Wilmington, Delaware' or 'San Francisco, California'
- arbitration_rulesUsually 'JAMS Comprehensive Arbitration Rules' or 'AAA Commercial Rules'
How to use it
- Get a lawyer to review, especially Sections 4 and 6. Present-tense IP assignment and the repurchase mechanics are where bad drafting costs you the round at diligence. A 1-hour review with a startup lawyer is a few hundred dollars; fixing it after a Series A term sheet is much more.
- File 83(b) within 30 days, no exceptions. If your shares are subject to vesting and you do not file an 83(b) election within 30 days of issuance, you pay ordinary income tax on the stock's value as it vests. For most founders this is a five-to-six-figure mistake. Mail it certified, keep the receipt.
- Write the equity-split rationale in one sentence, today. Two years from now neither of you will remember why the split was what it was. The line "equal split reflecting equal time, capital, and risk contribution at formation" is what protects the split if it ever gets questioned at a Series A.
- Pick a CEO now. Do not co-CEO. Co-CEO structures resolve in one of two ways: a real CEO emerges within 18 months, or the company stalls because no one has final say. VCs read co-CEO as unresolved founder dynamics.
- Default to 4-year vesting with a 1-year cliff. Reverse vesting is a standard startup practice that investors look for to protect the company if a founder leaves. Anything shorter than 4 years or without a cliff gets reset to market at the priced round, so just start there.
- Use present-tense IP assignment language, not future-tense. "Each Founder hereby assigns" works. "Each Founder agrees to assign" does not, in some jurisdictions, actually transfer the IP. This is the single most common drafting mistake and the first thing VC counsel checks at diligence.
- Vested-share repurchase: pick investor-friendly. Giving the company a right of first refusal on transfers of vested shares (rather than letting a departing founder sell to anyone) is what every Seed and Series A lead expects. Founder-friendly variants get redlined out at the priced round anyway.
- Equal splits are not a red flag. In 2024, 45.9% of two-person founder teams divided up their equity equally, and the share of three-founder teams splitting evenly rose to 27.3% in 2025. If equal is the honest answer, write equal.