Most co-founder fallouts are not about the idea; they are about the things nobody wrote down. A founder agreement template UK founders put in place early is the cheapest insurance a startup ever buys, because it forces the awkward conversations, who owns what, who does what, and what happens if one of you leaves, while everyone still likes each other. A founder agreement records the roles, the equity split, how that equity vests, the assignment of intellectual property to the company, restrictive covenants, and the "leaver" provisions that decide what happens to a departing founder's shares. This guide explains what a UK founder agreement should cover and how to draft one from vetted clauses in 99 Data Rooms. It is general information, not legal advice.
This is a document for founders and very early-stage startups, often two or three people, pre-incorporation or freshly incorporated, dividing up something that does not yet have much value but soon might. The reason to do it now rather than later is unsentimental: equity that felt obvious over a coffee becomes contested the moment the company is worth something or a founder walks, and by then the leverage to fix it fairly has usually gone. An investor working through a due diligence request list will also expect to see clean founder arrangements, so getting them right early saves pain during a raise.
What a UK founder agreement should cover
The first job is to set out the roles and the equity split. The agreement records who the founders are, what each is responsible for, the time commitment expected, and how the shares are divided. An equal split is common but not automatic, and the point of writing it down is that the basis for the split, and each founder's ongoing commitment to earn it, is agreed rather than assumed.
The clause that does the most work is vesting, usually reverse vesting for founders. Rather than earning shares over time, founders typically hold their shares from the outset but subject to the company's right to buy some back if they leave early, commonly on a schedule such as four years with a one-year cliff, though the numbers vary. This protects the company and the remaining founders from the classic disaster where someone leaves after a few months but keeps a large slice of the equity. Tied to vesting are the leaver provisions: the agreement distinguishes between a "good leaver" and a "bad leaver" and sets out what happens to unvested (and sometimes vested) shares in each case. These clauses are where a template earns its keep, because they are fiddly and consequential in equal measure.
A founder agreement is also the natural place to record how founders make decisions and what happens if they disagree. Setting out who decides what, and how a genuine deadlock is broken, sounds pessimistic at the start but is precisely the sort of thing that keeps a disagreement from becoming an existential problem for the company later.
Two further elements matter for any founder agreement. First, IP assignment: everything the founders create for the business, code, brand, designs, product, should be assigned to the company, not left in the personal ownership of whoever happened to make it, because under England and Wales law the creator is often the first owner unless rights are assigned (see Sources), and scattered IP is a serious problem at diligence. Our IP assignment guide explains that default in more detail, and an early advisory agreement should carry the same assignment. Second, restrictive covenants and confidentiality: founders agree to keep the company's information confidential and, within reasonable limits, not to compete or poach while involved and for a period after leaving. Where founders are exploring a deal with a third party before terms are set, a mutual NDA is the separate tool for that. Restrictive covenants are only enforceable so far as they are no wider than necessary to protect a legitimate interest, so they need careful, proportionate drafting. Given how much rides on equity and vesting, this is very much general information rather than legal advice, and a founder agreement is one of the documents most worth a professional review once it is drafted.
Drafting one in 99 Data Rooms
In the 99 Data Rooms drafter, "Legal Drafting", the Founder Agreement sits in the "People & Founders" cluster alongside the advisory and employment templates. It produces a document the same way every template here does, which is what makes it dependable for a routine baseline: the assistant selects vetted England and Wales clauses by ID from your answers and fills the blanks. It assembles from a maintained clause library; it does not invent the vesting or leaver wording itself. Vetted clauses, assembled.
You can open the template or describe the setup in plain words, "two co-founders, 60/40 split, four-year reverse vesting with a one-year cliff", and the assistant asks the questions that shape it: the founders, roles, the equity split, the vesting schedule, and the leaver treatment. It assembles the draft, including the IP assignment and restrictive covenants, and saves it free to keep. Because founder equity is high-stakes and easy to get subtly wrong, treat the output as a strong, current starting point and have it reviewed before you rely on it, especially the vesting and leaver mechanics. It is general information, not legal advice.
From draft to signed, without leaving the room
Drafting the founder agreement in 99 Data Rooms keeps a genuinely sensitive document inside one controlled flow rather than circulating as an attachment your co-founders forward around. Once drafted, you share it with the other founders as a tracked, revocable link, gated behind a verified email and a one-time code so only your co-founders can open it. Page-by-page analytics tell you whether each founder has actually read it and how long they spent, worth knowing for a document everyone should read properly rather than sign on trust, with the honest split between a raw visit and a verified viewer who cleared the gate.
When everyone is agreed, you send it for signature in the browser. Each founder signs in turn without needing an account, you can prompt whoever is dragging their feet with a reminder, and the executed PDF returns with an audit certificate recording who signed, when, their IP, intent to sign, and a SHA-256 fingerprint, a clean, dated record of who agreed to what, which is exactly what you will be glad of if the relationship is ever tested. Electronic signatures are admissible for most commercial documents in England and Wales, with exceptions such as deeds, wills, land transfers and lasting powers of attorney (see Sources), general information, not legal advice. The signed agreement files itself where the founders can find it, and access stays revocable in one click. Drafted, shared, tracked and signed, one document, never out of the founders' hands.
Draft your founder agreement for free
Draft a founder agreement from vetted England and Wales clauses in 99 Data Rooms, keep the draft, and share or sign it in the same place, settling equity, vesting and leaver terms before they can ever become a dispute. The free tier is a real tier: three rooms, twenty-five active links, forever, no card required. Start for free: it is in beta and improving fast, and the journey from "we should probably write this down" to a signed founder agreement with an audit trail already runs end to end in one place.
Sources
- Copyright first ownership (why founder IP must be assigned to the company): Copyright, Designs and Patents Act 1988, s.11, https://www.legislation.gov.uk/ukpga/1988/48/section/11
- Electronic signatures, validity and witnessing of deeds in England and Wales: Law Commission, Electronic execution of documents (2019), https://lawcom.gov.uk/project/electronic-execution-of-documents/ ; HM Land Registry Practice Guide 82, https://www.gov.uk/government/publications/electronic-signatures-accepted-by-hm-land-registry-pg82
Do co-founders really need a founder agreement?
It is not legally mandatory, but going without one is how avoidable disputes start. A founder agreement records the equity split, vesting, IP and leaver terms while relations are good, so there is a clear answer if a founder leaves or the company's value jumps. Investors also expect to see clean founder arrangements. This is general information, not legal advice.
What is reverse vesting and why do founders use it?
Reverse vesting means founders hold their shares from the start, but the company can buy some back if a founder leaves before their shares have "vested" over an agreed schedule, often four years with a one-year cliff. It protects the company and remaining founders from someone departing early while keeping a large equity stake. The template builds this in based on the schedule you choose.
What is the difference between a good leaver and a bad leaver?
A founder agreement typically defines these categories to decide what happens to a departing founder's shares: a good leaver (for example someone leaving through no fault) is usually treated more favourably than a bad leaver. The exact definitions and consequences are set in the agreement, which is why careful drafting matters. Take advice on the specifics; this is general information only.
Should a founder agreement assign IP to the company?
Yes. Everything founders create for the business should be assigned to the company rather than owned personally, because fragmented IP ownership is a serious problem when you raise or sell. The vetted template includes IP assignment for this reason, and our IP assignment guide covers the underlying law. General information, not legal advice.
Can all the founders sign online?
Yes. Once drafted, the agreement flows into e-signature inside 99 Data Rooms, so each founder signs in the browser and you get an executed PDF with an audit certificate showing who signed and when. E-signatures are admissible for most commercial documents in England and Wales, subject to the usual exceptions. General information, not legal advice.