Many Indian startups still begin with a handshake between friends and a basic cap table. Problems usually appear later—when the company raises capital, one founder leaves, or there is a disagreement over control.
A well‑drafted founders agreement for an Indian startup in 2026 should cover at least the following points.
1. Roles, responsibilities and time commitment
Spell out:
- Who is responsible for product, sales, operations, finance and compliance
- Expected time commitment (full‑time, part‑time, transition periods)
- Rules for taking up side projects or advisory roles
Clarity on roles early prevents confusion as the team grows.
2. Equity, vesting and cliffs
Key questions:
- How much equity does each founder hold at the start?
- What is the **vesting schedule** (commonly 3–4 years) and is there a **cliff period**?
- What happens to unvested and vested shares if a founder leaves?
Standard structures include reverse vesting and buy‑back rights to ensure that long‑term ownership aligns with long‑term contribution.
3. Decision‑making and deadlock
Your agreement should define:
- Matters that require unanimous consent
- Matters that can be decided by a simple majority
- A mechanism to resolve deadlocks (third‑party advisor, board, buy‑sell options)
Avoid vague language like “founders will mutually decide” without a process.
4. IP ownership and assignments
All intellectual property (code, designs, content, know‑how) created for the business should be assigned to the company, not held personally by founders.
Include:
- Clear IP assignment clauses
- Confidentiality and non‑disclosure obligations
- Rules for open‑source usage and contributions
This becomes critical during funding rounds and exits.
5. Exit, termination and non‑compete
A good founders agreement anticipates the possibility of exits or departures:
- Conditions under which a founder can be asked to leave (cause vs no‑cause)
- Treatment of shares and rights in each scenario
- Reasonable non‑compete and non‑solicit clauses, tailored to Indian law
Being explicit reduces the scope for disputes later.
For a customised founders agreement aligned with Indian laws and investor expectations, professional drafting support can save time and prevent expensive conflicts.
