Founders agreements are related to shareholders, partnership and operating agreements, and can be made either before or after a company such as a corporation or LLC is formed.

If founders intend to pursue their venture for an extended period of time prior to forming an LLC or corporation, an agreement may be a good idea. This is because their relationship, until they do form the LLC or corporation, will be considered a general partnership and be governed by the default provisions of the state’s partnership law unless and until they have a written agreement stating otherwise. In this sense, the founders agreement is really a partnership agreement.

Once there is an LLC or corporation in place, the founders agreement (which is really either an operating agreement or shareholders agreement) can serve ensure that founders have some control over the company. Additionally, it can be a way for founders who might not have been independently wealthy enough to inject substantial amounts of cash into the company to obtain ownership interests for their intellectual and sweat inputs. From an investor’s point of view, founders agreements can also be helpful in that they can be utilized to incentivize and ensure that the founders remain engaged in the business of the company.

Whether you are startup considering what type of company to form, or have already formed a company, our law firm can help craft a founders agreement that recognizes the sacrifices and contributions made by its founders. Contact us today, it would be our pleasure to assist you!