The partners' agreement in a startup
A partnership agreement is a private contract that is signed voluntarily between the partners of a company. At the same time, it serves to regulate the relations between them. It is recommended that this agreement be signed from the very beginning, without the need for an investor to be the one to propose it.
Thanks to this tool, the partners set out their objectives and goals and contemplate what to do in future situations and anticipate possible conflicts.
To sign this agreement it is not essential to have the company legally constituted. In fact, it is almost better to have it as soon as possible, when the project does not yet have an MPV with which to begin to have a first income.
On the other hand, there is a big difference between the shareholders' agreement initially signed by the founders of a startup and the one signed with a private investor in a capital increase.
OBJECTIVES OF THE PARTNER AGREEMENT BETWEEN FOUNDERS AND THE PARTNER AGREEMENT SIGNED WITH AN INVESTOR
The initial partners' agreement between founders prevents the team from breaking up at critical moments, since it:
- It regulates and distributes the work and dedication of the partners.
- It establishes what to do or how to do in case of separation of the team to keep the project going.
- If the startup fails, it says how the existing assets are to be distributed.
- Regulates the conditions for entry and exit of new partners.
- It also partly regulates the sale of the startup.
On the other hand, the one that will make you sign a capitalist partner, will fundamentally regulate the conditions of entry and exit of that new partner and future partners. In addition, it will include a series of clauses protecting your investment.
STRUCTURE OF A FOUNDERS' PARTNERSHIP AGREEMENT
A possible structure of an initial partners' agreement, for you and your team to draft this document.
1. Purpose, objectives, milestones and phases of the partnership agreement: regulate the collaboration of the partners for a specific time and define the phases to be met for the success of the startup.
2. Dedication: establishes the hours that each founding partner dedicates to the project.
3. Compensation and form of payment: in the event that a salary payment is established, the type of contract and amount is defined.
4. Ownership of assets: protects the assets contributed and generated by the project, specifying what they are and who owns them. In case the company exists, they belong to the company.
5. Case of abandonment: it defines what happens if any of the founders leaves the startup voluntarily, such as assignment or the right to repurchase the shares (in case the company exists) or share options in case it does not.
6. Entry into capital of new partners: establishes the percentage of dilution of each partner in case of capital increase.
7. Commitment of shares: in the event that stock options have been established, for the time dedicated or for the results obtained, it establishes what amount each partner will be entitled to at the time of legally incorporating the company.
8. Sale of the company: it usually includes the right of dragging or drag alone, the right of tag alone and what happens in case of bankruptcy.
9. Administration of the company: it defines the administration body of the Company in case it exists or any management formula required in case it does not exist, such as the establishment of a series of periodic work meetings.
10. In case of deadlock: it defines the arbitration body that would regulate the situation in case of legal conflict.
11. Confidentiality: establishes the confidentiality of the agreement between the partners.
It is recommended that this document be updated with successive rounds of financing and the entry of new investors. Each time a capital injection is made, it would be advisable to draw up a new pact, since the startup will change its equity and also its objectives as it enters a new phase.
SIGN THE FOUNDING PARTNERS' AGREEMENT IN A NOTARY'S OFFICE
This document is not regulated by any law, that is to say that it is not necessary to register it in the Mercantile Registry or before any public authority, but to give it legal entity it is very advisable to sign it before a notary.
If you sign it before a notary, this document can be elevated to public by any of the partners; that is to say that at the end you have the capacity to demand your rights before the justice if you consider it necessary. Any judge will take seriously an agreement of partners that has been signed before a notary, but I do not believe that it is this way if you have signed it in the living room of your house. This is another type of expense worth making.
When betting on a project, the most logical thing is that investors want to have all the possible guarantees. So, when entrepreneurs come in search of financing, it is usual that, along with the possibility of receiving that money, they find themselves with a partners' agreement.