Founders agreement, Tidalflow
Founders agreement template
Two people in Fremantle are building a tide and swell planning app and have not registered a company yet. There are no shares to issue, so this agreement fixes the split, records why it is 55/45 while the memory is fresh, and turns itself into shares on the day the company exists.
The document, page by page
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Section by section
What each section is for, so you can keep the ones you need and drop the rest.
- Cover and opening
- A contract cover naming both founders and the venture, then a paragraph on what they are building and their intention to incorporate.
- Signed before the company exists
- An information panel explaining that with no company there are no shares, so this document fixes the split and clause 10 converts it on registration.
- 1. What we are building
- The product in one sentence, and an exclusivity clause that bars competing work while allowing the disclosed outside consulting.
- 2. The equity split
- The table weighing four inputs for each founder, a stats row with the 55/45 split and 1,000,000 shares, and clauses fixing the split and treating cash contributed as a loan.
- 3. Roles and time
- Who owns product against who owns commercial, what needs both, the hours each founder commits, the revenue trigger before anyone is paid, and the outside work already disclosed.
- 4. Vesting
- Everything vesting from the day they started together, a twelve month cliff then 36 monthly instalments, a table of vested shares by year, and acceleration on a sale.
- 5. Intellectual property
- Assignment of everything created for the venture, the pre-existing model assigned outright, transfer of domains and app store accounts, and a register of licences and open source components.
- 6. If a founder leaves
- Good leaver and bad leaver outcomes, what is handed back on the day, and a twelve month restraint on building a competing marine planning product.
- 7. Money and expenses
- What the venture pays for against what each founder funds personally, a $2,000 solo approval limit measured on annual cost, and receipts entered within seven days.
- 8. Confidentiality
- Product plans, metrics, pricing work and investor conversations kept in, surviving three years after a founder leaves.
- 9. Disagreements
- The owner of the area decides, either founder may call one 48 hour pause, then mediation, then a buy or sell offer answered within 30 business days.
- 10. Incorporating
- A deadline of 31 March 2027, what carries across on registration, and the point at which a shareholders agreement replaces this document.
- 11. General and execution
- Western Australian law, variation in writing, counterparts and electronic signing, then a signature block for each founder.
Clauses in this document
- Background IP clause
- Counterparts clause: separate copies, one agreement
- Deadlock clause: breaking a tie in a 50 50 company
- Good leaver bad leaver clause: pricing a departing founder's shares
- Mediation clause: a required attempt at settlement before litigation
- Trade secrets clause
- Vesting clause: earning founder shares over time
What makes this document work
It records the reasoning, not just the percentage
A four row table weighs idea and prior work, cash contributed, time from day one and role, with a line for each founder. One built the tide model over 14 months and put in $40,000; the other joined at prototype and works three days a week until March. The 55/45 is the output of that table, so in two years nobody has to reconstruct it from memory.
Money in is a loan, not extra equity
The $40,000 and the $10,000 already spent are recorded as interest free loans, repayable once the company holds $150,000 in cleared funds, and they buy no additional shares. Without that clause the split moves every time one founder pays a hosting bill, which is how equity arguments usually start.
Every share vests, including the head start
All 1,000,000 founder shares sit on a four year schedule from the day the two started working together, with nothing vested at signing and a cliff at twelve months. The founder who had a 14 month head start was paid for it in the split itself, not in pre-vested equity, which keeps the incentive pointing forwards.
Questions people ask
Can you sign a founders agreement before registering a company?
Yes, and it is often the right moment. This one binds the two people rather than a company that does not exist, then clause 10 converts it: on registration the company issues the shares, takes the intellectual property assignment, assumes the two loans, and the vesting clock keeps running from 7 September 2026 without restarting.
Who owns code and designs written before the company existed?
Whoever created them, until they are assigned in writing. The general Australian position is that a business owns what its employees create in the course of their work, while a contractor keeps ownership unless the contract says otherwise. Founders are usually neither, so an express assignment is the only reliable route. Clause 5.2 assigns the earlier tide model and prototype in full with no royalty.
Should founders always split equity 50/50?
Only if the four inputs really are equal. Here they are not: different prior work, four times the cash from one side, and different starting hours. Writing the split as the answer to a table makes an uneven number easier to accept than a round one that nobody can justify later.
What is a bad leaver clause?
The rule that treats a founder who leaves badly differently from one who leaves well. In this agreement a good leaver keeps every vested share and gives up the unvested ones at issue price. A bad leaver, meaning serious misconduct, fraud or a serious breach left unfixed for 20 business days, forfeits everything unvested and can have half of their vested shares bought back at issue price too.
How should founders handle disagreements in the agreement?
By writing the process down while everybody still gets on. This agreement gives disagreements their own clause, setting out escalation before anything formal. Founders sign at the point they least expect a dispute, which is exactly why the clause has to be drafted then rather than during one.
What does the incorporating clause do?
It carries the agreement across into the company once it exists. This document is signed before incorporation, so the clause commits the founders to putting the same equity split, vesting and intellectual property terms into the company documents. Without it the pre incorporation agreement and the share register can quietly diverge.
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