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๐Ÿ“ Clarity from Day One: Documenting Founders' Roles in Startups ๐Ÿš€

David Wang, Wei Wu

๐Ÿ‘‹ When it comes to launching a startup, the excitement of chasing dreams is often intertwined with the hustle of building a solid foundation. One crucial but often overlooked aspect? Documenting founders' roles. ๐Ÿ“‹โœจ

Neglecting to document founders' roles can lead to confusion, disputes, and inefficiencies within the startup team. Clear role documentation is essential for accountability, alignment, and sustainable progress.

1. Formalize relationships of founders: Avoid acting through casual business relationships, even among friends and family.

2. Put everything in writing: Set out in writing each founderโ€™s role and responsibilities, including day-to-day operations. Record ownership percentages among the founders and any other owners of the business.

3. Dispute resolution: Create a mechanism for resolving disputes among founders. Specify how key decisions are to be made and how to break a tie if two founders disagree.

4. Consider the possibility of exit: A founder may exit from the business. Consider whether the departing founderโ€™s stock is subject to time-based vesting, whether there is any limit on the departing founderโ€™s right to continue to hold an equity stock in the business, whether the departing founder has any voting rights, and whether restrictive covenants exist governing post-exit activities.

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