Investment Support

Investment Support


Founders Service Agreement

Investment Support- This is the employment agreement for founders and each founder should sign one ahead of the funding round. It sets out their obligations, director duties, equity vesting schedule and more.

Difference between a Founders Pledge and Founder Service Agreement

The Founders Pledge is a lightweight version of the Founders Service Agreement – used by idea stage Companies. You should then migrate to a Founders Service Agreement before you start your first funding round.

Not planning to raise funding. Still need to sign a Founders Service Agreement

Yes! Many of the clauses present in the agreement are applicable to companies not taking in external investment e.g. roles and responsibilities, protection of the companies interests, confidentiality clauses, and founder restrictions.

Solo founder, need a Founders Service Agreement

Yes! The Founders Service Agreement is there to protect the company as well as the founding team – and investors will expect to see the warranties, IP assignment, and confidentiality clauses present in the Founders Service Agreement.

Shareholders Agreement instead of a Founders Service Agreement

No need to create a Shareholders Agreement until you get to a funding round. And then you will need to create Shareholders Agreement that replicates many of the terms present in your Founders Service Agreement.

 All founders need to sign a Founders Service Agreement

Yes! Founders Service Agreements are individual documents and each member of the founding team will need to sign one.

All Founders vest their equity

Yes! Having the founders equity vested will protect the company, and the rest of the founding team, in the event that a founder leaves. It can be the difference between the Company failing and surviving if this happens! And most investors will insist on founder share vesting anyway.

Reference:

https://learn.lawdocs.in/investment-support/


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