We have seen a lot of companies startup over the years, many with no real agreement or base line "in writing" to come back to ... so what are the basics to consider?My advice is get an in principal agreement in place before starting, it doesn't have to be huge maybe 1 to 2 pages and you should be able to write it between you in an hour or 2.
It should cover the basics
- Share split, buy in time (say 2 years to get all of your shares OR key milestones)
- Who owns what – pre-existing IP and customer base is owned by the company and is part of the contribution in return for shares in the company
- What happens if someone leaves (do the shares revert to the pool, stay with that person or do they need to be bought out by the other partners). I would suggest anything in the first 6-9 months is a pure revert to the pool, after that first option to buy out from the other parties ... this should be evenly bought if possible.
- Sweat equity multiplier. If there is a period of no money what is the value of shares or what is the repayment on the time invested (agree on a figure 1 month = $8K or something) and it is paid out once things pick up.
- Sunset. What is the agreed “end goal” is it to be bought out, to publically list, to grow into a large player. This is important that everyone understands … it is allowed to change along the way. If it is a buyout, who and when is the goal and what is the minimum price so you're all happy.
These are the key things to get peoples agreement and signature to before starting then soon afterwards I follow up with a lawyer written contract to cover the bases properly.
DISCLAIMER: I'm not a lawyer, just a venture developer who has done this a bit. The formal answer is pay a lawyer to draw it all up or there are websites that sell "packs" of legal documents for starting up a business.