Key Issues for Founders
"The reality is that most ventures fail because of people issues and are really a failure of the relationships among the team members. Teams come together around an interesting or exciting idea or opportunity and tend to get swept up in the idea. They often don’t talk about their shared aspirations, vision and what they want to get out of the venture. The venture gets launched without these discussions and then problems surface “Big Time” down the road when these undiscussed topics collide.
These problems can be surfaced and dealt with early on if Founders work at it. This can be done by addressing some of the...legal and business issues which the Founders of a new venture may want to consider in structuring their relationships among one another...
Of primary concern to members of the founder team is the question of how the equity in the new venture is to be allocated, both initially and over time...
A related question is whether a person whose stock has vested should be entitled to participate in the economic success of the venture after he or she leaves the company...[Other issues include:]
Transfers of Stock...
Take-along Rights...
Death/Disability...
Permitted Transferees...
Preemptive Rights...
Duration of Restrictions...
Control...
Proprietary Information...
Employment... Under what conditions can a founder be terminated and what consequences does this have to his or her stock ownership..."
Read more in this Founders Memo by Joseph G. Hadzima Jr., from which the foregoing was excerpted
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