Alidad Vakili, Associate at K&L Gates explains why a founders' agreement is important to avoid disagreements around founders responsibilities, vesting provisions, ownership of IP and more.

Video transcript:

What is important to include in a founders' agreement?

Founders' agreement is really an agreement that will be made by founders that come together when they have an idea to form a company. It's at the very early stage of a company's lifecycle and it's when nothing's has been created or formed yet, but some folks have a few ideas and they get around the table and talk about creating a company around those.

That agreement is really a critical agreement and it comes at a critical time because once you establish what those rights and responsibilities are, you want to make sure that going forward there isn't going to be any problems as a result of that. So, we often times will recommend that the parties come together and have the kind of frank discussions you want to have between people that are going to be starting a company. So, who will have what role and what responsibilities in the company, and it's not always that everyone has to have the same right or say in the company. You might divide it up based on the experience of the people sitting at the table that want to start the company.

For example, you might have someone that comes to the group that has a finance background and he or she may want to be the CFO or treasurer and handle the financial aspects of the company. Whereas another individual is going to be sort of a technical expertise of the company and has an engineering background or design background, whereas someone else might be the business manager because of his or her experience being a manager in various businesses. So, understanding those rules and responsibilities is critical and making sure that that agreement reflects that as well. So, everyone's role in the company is clear from the very beginning.


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About Alidad Vakili
Mr. Vakili is a lawyer in the San Francisco office of K&L Gates LLP, a global law firm, where he represents emerging companies, investors, and individual entrepreneurs. Mr. Vakili's practice includes business transactional and counseling matters, for companies in a wide range of industries, including companies in the cleantech and high-tech sectors. He regularly advises clients in the areas of business formation, corporate governance obligations, equity and debt financings, mergers and acquisitions, joint ventures, and other commercial transactions.

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