Two people hit it off and decide to start a business together.

Both of them work in perfect harmony until some time. 

Then, something happens. The performance of one of them slows down.

Disagreements creep up.

One of them starts to believe that he or she is giving far more to the business than the other, and therefore deserves a much higher profit share.

One of them seems to take all the decisions, consistently disregarding the opinion of the other.

This is when business start to suffer, without there being clear guidelines on what to do when this happens or any objective standards of performance.

Let’s say that this is not the case and both are working in perfect harmony.

Often it happens that they realise that there is a crucial skill that they lack, but will definitely need this skill for the business to fly off.

Enter the third partner.

This guy (or gal)  isn’t the part of the original two who bonded, but is loaded - either with money or with skill. 

Now the equation changes.

A need for protecting interests arises. A need to establish responsibilities is felt. 

At this stage, the original two want to make sure that people perform - and don’t leave the business high and dry when they leave. 

They need to ensure that people agree to give their intellectual property over to the Company. 

This is the story of countless startups today.

This heavily makes the case for why startups need a Co-founders Agreement.

It’s important that people who have started a business together know exactly what they are signing up for. It’s important to have a guiding mechanism in place before you convert your business into a formal entity.

Even if you have a formal entity, in addition to what outsiders get to see as the constitution of the entity, you require internal agreements among Co-founders of the business detailing their roles and expectations in return for their efforts.

Our webinar on Co-founders Agreements will help you identify when you should have Co-founders Agreements in place and how they can strengthen harmony between Co-founders. 

We will also discuss what can happen in the absence of a Co-founders Agreement.

Think of the agreement as the scaffolding around the delicate structure you are building. You sure need the scaffolding to be sturdy, right