Founder Notes — Guides on Founder Agreements, Equity & Vesting

Note 0425 min read

How Cookies Went Bankrupt: A Cofounder Deadlock With No Way Out

Cookies had raised $1.6 million and launched a real product when its two cofounders fell into a dispute the board could not resolve. Because the pending funding round needed every shareholder's sign-off, the deadlock and the cash crisis fed each other until the company had no way out.

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Note 0415 min read

Who Invented Square's Card Reader? A Fight Over Undocumented IP

Washington University professor Robert Morley helped Square's founders build its first card-reader prototype and its reading algorithm. Kept on as an advisor with no equity, he sued in 2014 claiming he had effectively been cut out as a cofounder. Square settled in 2016 for a reported $50 million.

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Note 0405 min read

Tinder's Founders v. Match and IAC: When Equity Protection Comes Too Late

In 2018, Tinder's founders and early executives sued parent companies Match Group and IAC, alleging a manipulated, lowball valuation had stripped away the value of their stock options. Match settled in 2021 for $441 million, just before the case reached a jury.

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Note 0396 min read

Winklevoss v. Facebook: A Dispute Over Who Owns an Idea

Cameron and Tyler Winklevoss and Divya Narendra allege Mark Zuckerberg used their social-network concept, built while he was helping them code it, to launch Facebook instead. Facebook disputes that account. The parties settled in 2008 for $65 million; the Winklevosses' attempt to reopen the deal later failed in court.

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Note 0386 min read

Zipcar's Cofounder Split: Why an Equal Share Is Not a Protected One

Robin Chase and Antje Danielson split Zipcar's equity roughly evenly in 2000. Danielson was fired within a year, Chase lost the CEO role in 2003, and both founders' stakes were diluted to a small fraction of the company well before Avis bought Zipcar for about $500 million in 2013.

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Note 0376 min read

The Snapchat Cofounder Dispute: What Happens Without an Agreement

Reggie Brown says he came up with Snapchat's disappearing-photo concept and an early version of its ghost logo, then was cut out within weeks, with nothing in writing. He sued in 2013; Snap's IPO filing later revealed a $157.5 million settlement, without the company ever calling him a cofounder.

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Note 0336 min read

How to Bring On a New Cofounder

Adding a cofounder after the start is normal and risky in equal measure. A startup disputes lawyer on equity for late cofounders, vesting, IP, and why the existing agreement must be amended, not ignored.

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Note 0325 min read

Should Founder Vesting Start Before Incorporation?

Your startup existed before your company did. A startup disputes lawyer explains why founder vesting should recognize pre-incorporation work, and how to set the start date without creating a dispute.

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Note 0315 min read

Template, Lawyer, or Platform?

A startup disputes lawyer compares the three ways founding teams get their founder agreement: the free template, the law firm, and the platform. An honest answer about when each one is right.

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Note 0305 min read

Do Cofounders Need an NDA With Each Other?

Cofounders rarely need an NDA with each other: between people building together it is close to unenforceable and covers almost nothing that matters. What actually protects a founding team is a founder agreement with confidentiality, IP and departure terms.

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Note 0295 min read

Who Should Own the Domain, the GitHub Org and the Cloud Accounts?

In the first years of a startup, ownership is mostly a set of logins. The domain, the GitHub org and the cloud accounts should be held for the company, with more than one owner. A founder agreement records where they belong and where they go at incorporation.

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Note 0286 min read

You're Building a Startup While Employed. Who Owns the Code?

Build a startup while employed, and your old contract may already claim the code. Whether it does turns on whose time, whose tools, and whose field. A founder agreement is how you protect the startup's IP before it becomes a dispute.

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Note 0276 min read

Can You Remove a Cofounder Before Incorporation?

Before the company exists, there are no shares to take back and no board to vote anyone out. What exists is a web of promises and contributions, and it can be dissolved cleanly or messily. Here is the honest map, from a lawyer who litigated the messy version.

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Note 0265 min read

What Is a Deadlock Clause?

A deadlock clause is the mechanism that lets a company move when its founders cannot agree. Here are the main designs, from domain-based final say to escalation ladders and buy-sell clauses, and how to choose one before you need it.

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Note 0256 min read

Why Do Cofounders Fall Out? The 5 Triggers I See Again and Again

After years of litigating cofounder disputes, the same five triggers appear in almost every file: asymmetric commitment, the unexamined split, silent drift, the first real money, and deadlock. Here is each pattern, and the clause that defuses it.

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Note 0246 min read

How to Break Up With a Cofounder Without Destroying the Startup

Some cofounder breakups end companies; others barely slow them down. After years of litigating the first kind, here is what the clean ones have in common: speed, dignity, one honest conversation, and paper.

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Note 0236 min read

My Cofounder Stopped Working. What Are My Options?

A cofounder who has drifted away while keeping their equity claim is one of the most common and most dangerous situations in early startups. Here is how to think about it clearly: the diagnosis, the conversation, and the options, with or without a signed agreement.

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Note 0225 min read

What Is Dead Equity, and Why Do Investors Hate It?

Dead equity is ownership held by someone who no longer contributes, usually a departed cofounder. Here is why it repels investors, the arithmetic that makes it worse every round, and the one-page prevention that costs nothing on day one.

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Note 0215 min read

What Is Dilution, and Should Founders Fear It?

Dilution means your percentage shrinks as new shares are issued. It is how startups are financed, and it is not the thing to fear. Here is how it actually works, the difference between good and bad dilution, and the worst dilution of all.

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Note 0204 min read

What Is Sweat Equity?

Sweat equity is ownership earned through work instead of cash. Simple in principle, dangerous in practice. Here is how it goes wrong for founding teams, the two numbers nobody sets, and how to paper it before it turns into a claim.

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Note 0195 min read

Technical vs Non-Technical Cofounder: How to Think About the Split

The technical founder builds the product, so they deserve more. That feels obvious in month three and collapses by year two. The mistake both sides make is pricing a snapshot instead of a four-year arc.

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Note 0185 min read

How Much Equity Is the Idea Worth?

"It was my idea" is one of the most litigated sentences in cofounder breakups. Here is what an idea is actually worth in equity, what the idea person often really contributes, and how to price it without poisoning the next four years.

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Note 0175 min read

How Much Equity Should a Part-Time Cofounder Get?

A part-time cofounder takes less risk and contributes fewer hours, and both of you know it. Here is how to price that honestly: the discount logic, the transition date, and the clause that saves the friendship when full-time never happens.

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Note 0165 min read

Should Cofounders Split Equity 50/50? A Startup Lawyer explains

50/50 is not the mistake investors think it is, and not the safe choice founders think it is. The danger is not the split. It is the silence about what happens when you disagree.

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Note 0155 min read

Do You Need a Lawyer to Write a Founder Agreement?

An honest answer from a lawyer who litigated cofounder disputes. For most pre-incorporation teams, the first thing you need is your actual promises, made explicit and written down. Here is when that is enough, and when a lawyer becomes non-negotiable.

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Note 0146 min read

What Should a Founder Agreement Include? The 12-Point Checklist

A founder agreement is not twelve clauses to copy, it is twelve conversations to have and write down before incorporation: equity, vesting, roles, decisions, IP, assets, departures, buyback and more.

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Note 0134 min read

Founder Agreement vs Shareholders' Agreement: What's the Difference?

A founder agreement governs the founding team and its promises before the company exists. A shareholders' agreement governs the shareholders of a company that already exists. You will need both, in that order, and one cannot replace the other.

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Note 0125 min read

What Is an 83(b) Election, and Why Do Founders File One? A Startup Lawyer's Take

An 83(b) election tells the US IRS to tax your restricted founder stock now, at its near-zero value at issuance, instead of at each vesting date later. You have 30 days from issuance, with no extensions.

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Note 0115 min read

Good Leaver vs Bad Leaver: What Is the Difference?

Good leaver and bad leaver provisions decide what happens to a departing founder's equity based on how they leave. A good leaver keeps what vested; a bad leaver can forfeit equity or be forced to sell it back, and the definitions matter more than the labels.

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Note 0104 min read

What Is a Vesting Cliff?

A vesting cliff is the opening stretch of a vesting schedule, usually the first year, during which nothing vests at all. Leave before the cliff date and you keep zero equity; cross it and your first block, typically a quarter, vests at once.

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Note 0094 min read

What Is a Cap Table?

A cap table shows who owns what after equity is issued. Before incorporation, founders may only have an intended allocation. The official cap table comes later.

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Note 0084 min read

Why Do So Many Startups Incorporate in Delaware?

Delaware is familiar to investors and built around a deep corporate law system. For many venture-backed startups, it becomes the expected path after the founder deal is clear.

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Note 0074 min read

What Is a Living Agreement?

A living agreement is not just signed and stored. It stays visible, trackable and updateable as the startup evolves.

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Note 0065 min read

How Should Cofounders Split Equity?

There is no universal split. Founders should consider contribution, role, risk, commitment and timing, then pair the split with vesting so the deal can survive change.

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Note 0055 min read

What Happens to Equity When a Cofounder Leaves Early?

If a cofounder leaves early, the key question is what part of the intended equity was earned. Good agreements make that answer visible before the dispute begins.

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Note 0045 min read

What Is Founder Vesting?

Founder vesting means founder equity is earned over time. Before incorporation, Goodvernance tracks intended founder equity, not issued shares.

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Note 0035 min read

Who Owns the IP in a Startup Before Incorporation?

Before incorporation, code, designs, domains and product assets often sit with individual founders. Without a clear assignment commitment, the future company may not clearly own what it needs.

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Note 0025 min read

Do You Need a Founder Agreement Before Incorporating?

Yes. Before incorporation, founders already make promises about roles, equity, IP and decisions. A founder agreement makes those promises clear before memory and pressure distort them.

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Note 0014 min read

A Founder Agreement Should Not Be a Dead PDF

A standard founder agreement records the promise. Goodvernance keeps it alive through tracking, versioning and a dashboard founders can actually use.

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The governance knowledge every founder should have

Sign It While You Trust Each Other

What Is a Cap Table?

Good Leaver vs Bad Leaver: What Is the Difference?

How Much Equity Is the Idea Worth?

How Cookies Went Bankrupt: A Cofounder Deadlock With No Way Out

Who Invented Square's Card Reader? A Fight Over Undocumented IP

Tinder's Founders v. Match and IAC: When Equity Protection Comes Too Late

Winklevoss v. Facebook: A Dispute Over Who Owns an Idea

Zipcar's Cofounder Split: Why an Equal Share Is Not a Protected One

The Snapchat Cofounder Dispute: What Happens Without an Agreement

How to Bring On a New Cofounder

Should Founder Vesting Start Before Incorporation?

Template, Lawyer, or Platform?

Do Cofounders Need an NDA With Each Other?

Who Should Own the Domain, the GitHub Org and the Cloud Accounts?

You're Building a Startup While Employed. Who Owns the Code?

Can You Remove a Cofounder Before Incorporation?

What Is a Deadlock Clause?

Why Do Cofounders Fall Out? The 5 Triggers I See Again and Again

How to Break Up With a Cofounder Without Destroying the Startup

My Cofounder Stopped Working. What Are My Options?

What Is Dead Equity, and Why Do Investors Hate It?

What Is Dilution, and Should Founders Fear It?

What Is Sweat Equity?

Technical vs Non-Technical Cofounder: How to Think About the Split

How Much Equity Is the Idea Worth?

How Much Equity Should a Part-Time Cofounder Get?

Should Cofounders Split Equity 50/50? A Startup Lawyer explains

Do You Need a Lawyer to Write a Founder Agreement?

What Should a Founder Agreement Include? The 12-Point Checklist

Founder Agreement vs Shareholders' Agreement: What's the Difference?

What Is an 83(b) Election, and Why Do Founders File One? A Startup Lawyer's Take

Good Leaver vs Bad Leaver: What Is the Difference?

What Is a Vesting Cliff?

What Is a Cap Table?

Why Do So Many Startups Incorporate in Delaware?

What Is a Living Agreement?

How Should Cofounders Split Equity?

What Happens to Equity When a Cofounder Leaves Early?

What Is Founder Vesting?

Who Owns the IP in a Startup Before Incorporation?

Do You Need a Founder Agreement Before Incorporating?

A Founder Agreement Should Not Be a Dead PDF

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