Source: Shutterstock / By Dusan Petkovic
One of the most important things to get right when starting a business as an entrepreneur is the team you’re going to build. This is all the more critical when you’re starting a business in partnership with someone – even if they’re your close friend, or even your brother or sister, the Financial Times has discovered!
In their recent article, the FT suggests that business co-founders write “pre-nups” in much the same way that couples do before getting married. Fantastic Services CEO and co-founder Rune Sovndahl was asked to join other business leaders in contributing their experience to the piece.
The pre-nuptial type document that the Financial Times is talking about is, of course, the founders’ agreement.
What is a founder’s agreement?
A founders’ agreement is a contract drawn up between the founding members of a company. Although not a magical cure for all arguments, founders’ agreements let those involved in commencing trading as a start-up have a framework to fall back on in case of disagreement.
The issues a founders’ agreement generally covers include:
- Roles and responsibilities
- Intellectual Property ownership
- How to decide when other shareholders are brought in
- What to do if a partner wants to leave
Fantastic Services’ co-founders Rune Sovndahl and Anton Skarlatov get on well. But they’ve still made a series of agreements with each other to avoid the worst disagreements which can crop up even between well-meaning people in the high-pressure world of business.
Why write a founder’s agreement?
There have been high-profile falling-outs which have spelled the end of many companies or partnerships. And there are plenty of pretty shocking statistics relating to how easily even solid founding relationships can quickly become disasters.
The FT article mentions:
- 65% of “high-potential” start-ups fail due to disagreement, according to Noam Wasserman of the University of Southern California.
- Zipcar, the US car-sharing firm – which was started by two friends, one of whom ended up firing the other, only to leave the business themselves.
So if you’re thinking about starting your own business with a partner, it’s well worth considering a founder’s pre-nup. If you need to know more on the subject, head on over and check out what the Financial Times has got to say on the subject!