Can a Founders Agreement be signed electronically?

Yes. Electronic signatures are legally enforceable under the ESIGN Act (15 U.S.C. §7001) and UETA in most states, provided there is intent to sign, consent to an electronic record, attribution, and reliable record retention.

Is notarization required for a Founders Agreement?

Generally no for standard corporate agreements. Notarization may be required if the agreement contains deeds, real property conveyances, or state-specific formalities; verify with state law or counsel.

What happens if a founder’s name differs across documents?

Mismatch can cause tax and bank-account issues. Use full legal names consistently and add a legal alias clause or affidavit if a discrepancy exists to link records.

How should IP created before incorporation be handled?

Disclose background IP explicitly, and include assignment or license language. Attach schedules listing preexisting inventions to avoid later ownership uncertainty.

Do investors require a specific governing law?

Investors often prefer Delaware law for predictability. The governing-state clause affects dispute procedures and should be selected with legal counsel.

How long should executed agreements be retained?

Retain signed originals for the agreement term plus at least three years; tax or industry rules may require longer retention (e.g., IRS or HIPAA standards).

Founders Agreement

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FOUNDERS AGREEMENT

Parties and Formation

Company Name:

Effective Date:

Founder 1 Name: Founder 1 Address: Founder 2 Name: Founder 2 Address:

Entity Type (select applicable): Corporation LLC Partnership Other

Recitals

WHEREAS, Company Name: is being formed for the purpose of conducting the business described in this Agreement; and

WHEREAS, Founder 1: and Founder 2: (each a "Founder" and together the "Founders") wish to set forth their respective rights and obligations with respect to the Company; and

WHEREAS, the Founders intend that the terms of this Agreement shall govern allocation of equity, responsibilities, confidentiality, and other material matters between the Founders and the Company.

Definitions

Confidential Information means all non-public information, technical or business information, trade secrets, know-how, software, plans, proposals, financial data, customer lists and other proprietary information disclosed by or on behalf of any Founder or the Company to any other Founder or to the Company, whether disclosed orally, in writing, or by inspection, and including derivative works thereof.

Scope of Work and Responsibilities

The Founders agree to the following allocation of responsibilities, and will perform the Scope of Work set forth below in good faith and with reasonable skill and diligence.

Scope of Work: Founder 1 Responsibilities: Founder 2 Responsibilities:

Equity, Vesting and Issuance

The Founders agree the initial equity ownership of the Company will be allocated as follows, subject to the vesting provisions below and issuance by the Company in accordance with applicable law and organizational documents.

Founder 1 Equity Percentage: Founder 2 Equity Percentage:

Vesting: All equity subject to vesting shall vest according to the schedule set forth below, subject to acceleration only as expressly provided herein.

Vesting Period (years): Cliff Period (months):

Acceleration on Change of Control (select if applicable): Full acceleration Partial acceleration No acceleration

Payment Terms

The Company may compensate Founders for services rendered as set forth below. Any compensation does not modify equity allocations unless expressly stated in a separate written amendment signed by all Founders.

Compensation Amount: Payment Schedule: Late Fee for Overdue Payments: Payment Method:

Term and Termination

This Agreement shall commence on the Effective Date and shall continue until terminated as provided below.

Start Date: End Date:

Notice Period for Termination (days):

Termination for Cause: A Founder or the Company may terminate this Agreement immediately for material breach, insolvency, commission of fraud, willful misconduct, or other cause that is not cured within the notice period set forth above. Termination without Cause: Either party may terminate upon written notice in accordance with the notice period.

Confidentiality

Each Founder acknowledges that Confidential Information is the exclusive property of the disclosing party. Founders shall not disclose Confidential Information to any third party without prior written consent, and shall use Confidential Information solely for purposes of performing obligations under this Agreement. The obligations in this paragraph survive termination of this Agreement for a period of from the date of termination, except for trade secrets which remain protected to the extent permitted by law.

Exceptions to Confidentiality include information that: (a) is or becomes publicly available other than by breach of this Agreement; (b) is rightfully received from a third party without obligation of confidentiality; or (c) is independently developed without use of Confidential Information. Upon written request or termination, recipients shall promptly return or destroy Confidential Information and certify destruction in writing.

Intellectual Property

Each Founder assigns to the Company all right, title and interest in and to any inventions, works of authorship, improvements and developments conceived or reduced to practice by such Founder, alone or with others, during the term of this Agreement that relate to the business of the Company. Founders agree to execute documents reasonably requested to effect such assignment.

Representations and Warranties

Each Founder represents and warrants that (a) such Founder has the full power and authority to enter into this Agreement; (b) the execution and performance of this Agreement will not violate any agreement with any third party; and (c) there are no pending or threatened claims that would materially impair such Founder's ability to perform hereunder.

Governing Law; Dispute Resolution

This Agreement will be governed by and construed in accordance with the laws of the State of without regard to conflict of law principles. The Founders agree to first attempt in good faith to resolve disputes through negotiation. If negotiation fails, the parties submit to the exclusive jurisdiction of the state and federal courts located within the selected State.

Miscellaneous

Entire Agreement: This Agreement, together with any exhibits or schedules expressly incorporated, constitutes the entire agreement among the Founders with respect to its subject matter and supersedes all prior agreements and understandings. Any amendment must be in writing and signed by all Founders.

Severability: If any provision of this Agreement is held invalid or unenforceable, the remaining provisions remain in full force and effect and the parties shall negotiate in good faith to replace the invalid provision with a valid provision that achieves, to the extent possible, the original economic intent.

Notices: All notices required or permitted under this Agreement shall be in writing and delivered to the addresses set forth above or to such other address as a party may designate by written notice to the other parties.

Founder 1:

By:

Date:

Founder 2:

By:

Date:

What a Founders Agreement Is and When It Matters

A Founders Agreement is a written contract among a company’s founders that documents equity ownership, roles, decision-making authority, vesting schedules, intellectual property assignment, and exit rules. It establishes expectations about contributions, compensation, dilution, dispute resolution, confidentiality, and what happens if a founder leaves. Properly drafted, it reduces ambiguity during early-stage growth, supports future fundraising by showing clear governance, and serves as primary evidence of cofounder rights and obligations in any legal review or negotiation.

Why a Founders Agreement Protects the Business and the Team

A clear Founders Agreement preserves value by allocating equity, defining responsibilities, and setting procedures for departures and capital events. It reduces later disputes and helps investors and advisors assess stability, governance, and risk.

Who Typically Uses a Founders Agreement

Use the agreement as a living document: update it when ownership, roles, or capital structure changes to keep governance aligned with company growth.

First-time founders and cofounder teams with equity splits and role definitions to formalize.
Seed investors and accelerators reviewing governance risk and founder commitments.
Company counsel and outside attorneys preparing enforceable vesting, IP assignment, and exit provisions.

Core Sections Every Professional Founders Agreement Should Include

A comprehensive Founders Agreement clarifies legal and commercial relationships among founders. The following six components form the backbone of standard agreements used by U.S. startups and investors.

Equity & Ownership

Specifies each founder’s share percentage, classes of stock (if any), and initial capitalization to prevent later disputes over ownership.

Vesting Terms

Includes vesting schedule and cliff length (commonly four-year vesting with a one-year cliff) and treatment of accelerated vesting on termination or sale.

Roles & Responsibilities

Defines founder roles, time commitments, job descriptions, and expectations for contributions of cash, IP, or sweat equity.

IP Assignment

Requires assignment of inventions and proprietary information to the company and confirms ownership of background IP or licensing terms.

Transfer Restrictions

Covers right of first refusal, buyback options, lock-ups, and drag-along/tag-along rights to control transfers and future sales.

Dispute Resolution

Specifies governing law, arbitration or mediation clauses, and procedures for deadlocked decisions or removal of a founder.

Step-by-Step: Completing a Founders Agreement

Follow a structured sequence to minimize omissions and ensure enforceability across corporate and investor processes.

01

Gather Information: Collect legal names, TINs, addresses, capital contributions, and IP disclosures from each founder.
02

Draft Core Terms: Document equity, vesting, roles, transfer restrictions, and IP assignment in clear language.
03

Review Legal Issues: Have counsel review tax, securities, and employment classification implications before signing.
04

Execute and Store: All founders sign, date, and receive copies; store originals and digital copies with secure retention.

Customizing Online Workflows for Execution and Recordkeeping

Configure the eSignature workflow to match sign order, authentication level, and post-signature distribution for corporate recordkeeping.

Signing Order	Sequential or parallel signer order to control execution flow
Authentication	Email link, SMS code, or knowledge-based authentication depending on signer risk
Required Fields	Make signature, printed name, date, and IP assignment checkboxes mandatory
Audit Trail	Enable detailed audit trail capture (IP, timestamp, actions)
Storage	Auto-archive signed PDFs to corporate document system or cloud storage

Where to Send or File the Signed Agreement

After execution, route signed copies to corporate records, counsel, and investor or payroll systems as applicable.

Corporate Records: Company’s minute book or secure digital repository
Legal Counsel: Retention copy for compliance and future amendments
Investors/Cap Table: Update cap table and deliver to lead investor or law firm
Payroll/Tax: Send relevant sections to payroll or tax advisor

Delivery and Signing Options for Online Execution

Configure retention, audit trail, and integrations (for example, with accounting or CRM systems) to ensure signed copies are discoverable and secure.

Email Link: Standard, low-friction authentication
SMS Code: Adds two-factor verification without complex KBA
Remote Notarization: Use RON where notarization is required and permitted

Key Timing Considerations and Deadlines

Founders should track execution dates, vesting start dates, capital contribution due dates, and any filing deadlines tied to equity issuance.

Execution Date:

MM/DD/YYYY; sets effective obligations and vesting commencement

Vesting Start:

Align with start-of-service date to avoid disputes

Equity Issuance:

Document issuance date for tax reporting (IRS procedures may apply)

409A Valuation:

Obtain before issuing options to set exercise price for tax compliance

Tax Filings:

File required forms and provide statements to payroll/tax advisors timely

Typical Milestones from Formation to Full Implementation

A milestone sequence helps coordinate legal, tax, and operational tasks from signing through capitalization.

01

Agreement Execution

Founders sign and date the agreement immediately after final review

02

Equity Issuance

Company issues stock or options and records allocations on the cap table

03

409A & Tax Step

Secure 409A valuation and confirm tax consequences for option grants

04

Record Retention

Store signed agreement and related IP assignments in the corporate records repository

Common Pitfalls When Preparing a Founders Agreement

Leaving vesting or cliff terms ambiguous, which causes disputes over unvested equity.
Failing to assign IP clearly, risking later ownership challenges and licensing complications.
Neglecting transfer restrictions and buyback provisions, which complicates exits or founder departures.
Skipping legal and tax review, resulting in adverse tax treatment or securities issues.

Legal and Financial Risks of an Incorrect or Missing Agreement

Equity Disputes: Co-founder ownership challenges may lead to costly litigation and operational disruption

IP Loss: Unassigned inventions risk founders retaining rights, reducing company value

Tax Exposure: Misdated or incorrect option grants can trigger adverse tax under IRC provisions

Securities Compliance: Improper equity issuance may violate state or federal securities laws

Investor Confidence: Missing documentation can delay or derail fundraising rounds

Enforceability: Poorly executed signatures or recordkeeping can impair enforceability under ESIGN/UETA

Who Can Sign the Founders Agreement

Individual Founder

A founder signs in their individual capacity and should use their full legal name. If a founder acts on behalf of an entity, include the entity name, position, and attach proof of authority to sign.

Authorized Representative

An authorized signatory (e.g., CEO or corporate officer) may sign for the company. Document board authorization or power of attorney where required to confirm authority and avoid future challenges.

Real-World Use Cases for a Founders Agreement

These short case examples show why founders formalize key terms early and update the agreement as the business evolves.

Early-Stage Split Clarification

A three-person founding team documented a 40/40/20 split and a four-year vesting schedule with a one-year cliff

This prevented a later dispute when one founder reduced hours
The explicit vesting and repurchase terms allowed the company to buy back unvested equity without litigation and preserved investor confidence.

IP and Contractor Conversion

A founder contributed code written before incorporation and executed a background IP disclosure with assignment terms

Inclusion of an IP schedule clarified ownership
This avoided a contentious negotiation during due diligence and smoothed a subsequent seed round closing.

Typical eSignature Pricing and Compliance Features — signNow First

Compare basic pricing and key compliance features among common vendors to inform selection for executing a Founders Agreement. Vendor placement is neutral and factual.

	signNow	DocuSign	Adobe Sign	PandaDoc	HelloSign
Starting Price	$8/user/mo	$15/user/mo	$14/user/mo	$19/user/mo	$15/user/mo
Free Trial	7-day free trial	No	No	Yes, limited	Yes, limited
Bulk Send	Yes	Yes	Yes	Yes	No
Audit Trail	Yes	Yes	Yes	Yes	Yes
Envelope Cap	No cap	100 envelopes/user/year	Varies	Varies	Varies

Frequently Asked Questions About Founders Agreements and eSigning

Answers to common execution, enforceability, and recordkeeping questions for founders, counsel, and investors.

Need help? Contact support

Can a Founders Agreement be signed electronically?
Yes. Electronic signatures are legally enforceable under the ESIGN Act (15 U.S.C. §7001) and UETA in most states, provided there is intent to sign, consent to an electronic record, attribution, and reliable record retention.
Is notarization required for a Founders Agreement?
Generally no for standard corporate agreements. Notarization may be required if the agreement contains deeds, real property conveyances, or state-specific formalities; verify with state law or counsel.
What happens if a founder’s name differs across documents?
Mismatch can cause tax and bank-account issues. Use full legal names consistently and add a legal alias clause or affidavit if a discrepancy exists to link records.
How should IP created before incorporation be handled?
Disclose background IP explicitly, and include assignment or license language. Attach schedules listing preexisting inventions to avoid later ownership uncertainty.
Do investors require a specific governing law?
Investors often prefer Delaware law for predictability. The governing-state clause affects dispute procedures and should be selected with legal counsel.
How long should executed agreements be retained?
Retain signed originals for the agreement term plus at least three years; tax or industry rules may require longer retention (e.g., IRS or HIPAA standards).

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