Each founder’s ownership percentage and share class, stated explicitly. Equity splits that seem natural at founding — 50-50, 33-33-33, or negotiated percentages — must be documented before any work begins. An equity split agreed verbally during an early meeting has no legal force. Only the documented allocation in a signed agreement binds the parties.

The mechanism by which equity ownership is earned over time rather than granted immediately. The standard for US startups is four years total vesting with a one-year cliff. Without a vesting schedule, a co-founder who leaves after three months retains their full equity — which creates a permanent undiluted block on the cap table held by someone no longer contributing, which creates problems at every subsequent financing and at exit. The vesting schedule must also specify what acceleration, if any, applies upon a change of control — whether the unvested equity accelerates fully, partially, or not at all when the company is acquired.

Under 17 USC 101, co-founders own the work they create by default. Without a written IP assignment, code written before the company incorporated, business concepts developed during the pre-formation period, and any other prior work belongs personally to the founder who created it. The IP assignment must cover all work created during the employment relationship and must explicitly cover work created before the agreement date that is relevant to the company’s business. In California, the assignment must include the Labor Code Section 2870 carve-out protecting founders’ rights to inventions developed outside company resources. Investors will ask for this document at due diligence. It must exist and it must cover prior art.

Which founder is responsible for which domain — technical, product, commercial, operations — and what decisions each can make unilaterally versus what requires agreement from all founders. This provision does not prevent role evolution as the company grows, but it establishes a baseline that prevents the most common early-stage dispute: a founder taking actions in a domain they were not designated to lead, or refusing to accept decisions made by a founder who was.

Restrictions on what a departing founder can do during and after the founding period. Non-competes for founders require careful state-specific drafting: California broadly voids them under BPC 16600. Texas enforces them under the Covenants Not to Compete Act with specific requirements. Florida actively enforces them under Statute 542.335. Non-solicitation provisions — restrictions on hiring away employees and approaching customers — are separately treated from non-competes in most US states and carry different enforceability standards. Legal Chain drafts both provisions with the applicable state’s standards applied.

What happens to a departing founder’s vested and unvested equity. Unvested equity typically returns to the company’s equity pool automatically under the vesting schedule. Vested equity is more complex: does the company have a right to repurchase it? At what price — fair market value, cost, or book value? Over what timeline? With what effect on the departing founder’s relationship with investors? These mechanics must be written before a departure is imminent. Attempting to negotiate them at the moment of departure, when emotions are high and leverage is asymmetric, produces the worst outcomes for both parties and sometimes for the company.

Each founder agrees to maintain the confidentiality of the company’s trade secrets, proprietary information, and customer data during and after the founding period. This provision operates independently of the IP assignment — the IP assignment determines who owns the work; confidentiality determines who can disclose it and to whom. Both provisions are scrutinized at investor due diligence.

Whether co-founder disputes are resolved by arbitration, mediation, or court — and which state’s law governs. For most startups, mediation before arbitration provides the fastest path to resolution at the lowest cost. The governing law should be the state of incorporation — typically Delaware — or the state where the majority of founders work, with careful attention to whether the chosen state’s law on IP assignment carve-outs, non-compete enforceability, and fiduciary duties produces the intended outcome.