Founders Agreement with Vesting

The single biggest reason Indian startups blow up before Series A is not the market — it is the absence of a Founders Agreement, or a Founders Agreement so poorly drafted that the first co-founder exit destroys the cap table. Every credible investor in 2026 — Sequoia, Accel, Peak XV, Blume, Chiratae, Lightspeed, Elevation, all the way down to angel networks and family offices — asks for the Founders Agreement in their first DD checklist. If it isn't there, or it isn't a real one, the round either gets re-negotiated downwards or gets dropped.

A Founders Agreement is not a friendship contract. It is the operating constitution of the company. It governs equity, vesting, IP ownership, roles, decision authority, leaver outcomes, non-compete, confidentiality, and dispute resolution — before founders have anything to fight over, while everyone is still aligned. Drafting it after a co-founder wants to leave is too late. Drafting it before the company exists is a liability. Drafting it within the first 90 days of incorporation, with proper vesting, is the only window that works.

We draft Founders Agreements that pass the Series A diligence test on day one. Not a 4-page template. A negotiated, board-ready instrument that aligns with the eventual SHA, the ESOP plan, and the IP assignment deeds.

What a Real Founders Agreement Locks Down

• Equity Split & Reverse Vesting:: 4-year vest with 1-year cliff is the market standard; we tune the schedule for full-time vs part-time founders, technical vs commercial roles, and pre vs post-incorporation contribution. Unvested shares clawback to the company at a defined formula price.

• Roles, Time & Title:: Defined founder titles, full-time commitment, exclusivity, and KPI-linked role expectations. No 'we'll figure it out later'.

• Reserved Matters & Decision Protocols:: Which decisions need unanimity, which need a majority, which the CEO can take alone. Drafting around the inevitable 50-50 deadlock is the most under-rated clause in Indian agreements.

• IP & Inventions Assignment:: All pre-incorporation and during-tenure IP assigned to the company in a separate IP Assignment Deed — without this, the company does not own its product.

• Good Leaver / Bad Leaver:: A founder who exits before vesting completes loses unvested shares; a bad leaver (breach, fraud, voluntary exit before cliff) loses more. Repurchase price formula explicit.

• Non-Compete, Non-Solicit & Confidentiality:: Calibrated to be enforceable in Indian courts (Section 27 ICA) — narrow, time-bound, geography-bound.

• ESOP Pool Pre-Allocation:: A 10–15% ESOP pool carved out before fundraising, with a defined vesting and cliff, so the dilution is from the founders' own pre-money — not from incoming investors.

• Dispute Resolution:: Arbitration seat, governing law, escalation hierarchy — designed to keep cap-table fights out of public court.

Why Templates Off the Internet Get Founders Killed at DD

They miss IP assignment, miss reverse vesting, miss leaver clauses, are signed without ROC filing alignment, ignore the AOA, and use US boilerplate that fails Indian Companies Act / Contract Act tests. Investor counsel spots all of this in 20 minutes. The round either re-prices or dies.