You’ve done enough testing to think you want to work with your co-founder long-term. Now what? While specific legal elements of establishing your company will vary from country to country, some core issues remain universally important.
Legal agreements matter.
Think of a legal agreement, taken after the initial testing period when you have started creating a product and seeing initial traction, as a marriage prenup. Navigating the path to legalized partnership is a great way to test having difficult conversations with your co-founder and to see how you negotiate with each other and make decisions together. It’s not a sign of distrust to say that you need a legal agreement governing your relationship; it’s a sign of professionalism. You’re about to create an entity together that could become valuable.
With a contract in place from early on, you have a road map for difficult decisions that may come into play later. A written agreement about how the company is governed and how proceeds will be divided provides protection. And it’s much easier to make these agreements when your company is worth nothing versus millions.
While setting your company up, you’ll each need to sign formal legal documents detailing your relationship to your company. These are sometimes called a Founder Agreement or Service Agreement. Cooley and SeedLegals are good places to create these. While The Co-Founder Agreement Checklist can’t replace those documents, it can help you agree in advance the key points you’ll be signing up to.