How to do a co-founder/leadership team agreement ?

How to do a co-founder/leadership team agreement ?

When Yahoo chief Marissa Mayer made all her leadership team promise to stay for 3 years, it generated a lot of chatter, Lucy Kellaway even wrote an article in the FT and did a podcast on this topic on the BBC.

Now one of the big issues in any leadership team is commitment. People jumping ship or freeloading (ie not doing anything for their shares) is a problem be it a large company like Yahoo or a startup.

How one builds one’s leadership and gains their commitment is the critical issue in the success of a startup.

Making sure people are committed and that the rewards are connected and aligned to one’s contribution is fundamental.

Equally important is the concept of fairness and understanding the risks that the stakeholders (founders, leadership team, employees, investors and partners) is fundamental.

No one likes unnecessary paperwork but equally important is the need to put the right structures in place once the project has momentum is also important.

Teaming up with someone can either be one of the most rewarding experiences or the most frustrating of experiences.

The aim of this blog is to help you avoid unnecessary mistakes or grief.

This blog and the supporting presentations/videos cover three things
1. Legal Framework (when you need it, consequences etc)
2. How to decide what is fair an equitable when deciding how to allocate shares and a mechanism for resolving disputes
3. Background/Research on where co-founders and teams come together

Hopefully this will save you a lot of heartache, cost and time when you are building your venture and also make any transition or exit of any party easier.

Creating a company needlessly when the idea has not been validated or gotten traction is a waste of time, money and effort (and does not fit with lean principles) but at a certain point one needs to put the paperwork in place, especially when one moves to getting external funding and shareholders involved.

On Monday 29th Feb 2016, We ran our co-founders/start our business event (our regular free events to help people start a business and build their team) on how to structure agreements between co-founders, your leadership team and investors. It was well received and so I am sharing the material here.

The team from Lemans and William Fry gave some excellent and very educational presentations covering the legals and administrative formalities that you need to do to do it right.

(Many thanks to Eoin, Gavin and Kathy for their excellent talk. While it refers to the Irish legislative framework I think the general principles hold true in all domains.

Here are their presentations.

They cover the lifecycle of a business from an initial partnership, to incorporation to raising external financing.

 

 

The Road to Funding – Legal Issues

 

Here is one of the best ways on how to agree the valuation of everyone’s effort and how to agree what happens if things breakdown or has to exit the partnership…

 

and for those interested on who to co-found with…

 

and on how to manage those relationships…

 

[reinvent.me]

March 3, 2016 / by / in , , , ,

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