SaaS Co-Founders Agreement: Get Ready for Fundraising

Recently I had an open discussion with a charismatic SaaS business lawyer Omeed Tabiei about the nuances of legally managing co-founder relationships.

Omeed even shared a gift??- the co-founder agreement template.

Wanna have it? Just read the article carefully.??

When should you start discussing the co-founder agreement?

Well, let's keep it real.

Picture this: you've got this killer idea for a SaaS startup, but it's still in the dreaming phase.

No revenue, no drama – simple as that.

But as you start gaining traction and hitting those crucial milestones – like getting feedback, prepping a demo, snagging those early adopters, and building that waiting list – things start to heat up. Suddenly, you're faced with questions like who's putting in the hustle, who's making the calls, and who's got skin in the game.

Omeed's advice?

Don't wait until the tension becomes too dangerous. Sure, you might not be ready to sign on the dotted line just yet, but having those honest conversations about what each founder brings to the table? It's a game-changer.

Even if you're not ready to draw up a fancy agreement, jotting down those key points in an email can be a lifesaver. Trust us, it's better to lay down the groundwork now than deal with the fallout later.

Bottom line?

Don't let those uncomfortable conversations linger. Grab your co-founder, grab a coffee, and get real about what it takes to make this partnership work. Your startup – and your sanity – will thank you for it.

When to sign the official agreement?

Sooner rather than later is the name of the game.

Think about it this way: if you're in it for the long haul with a business partner, you want to make sure everyone's on the same page from day one. That means having that co-founder agreement locked in as soon as you know this partnership is the real deal.

For some, that might mean sealing the deal as soon as the ink's dry on the incorporation papers. After all, if you're gearing up to spend years building a business together, you'll want to have those ground rules established early on.

Co-founder agreements can take different shapes and sizes.

They might be split into separate documents covering operating procedures, ownership stakes, and intellectual property rights. Or, they could be bundled together in one comprehensive agreement – it all depends on what works best for your startup.

But here's the kicker: as you start gearing up for expansion, scaling, and yes, fundraising, having that official co-founder agreement becomes non-negotiable. Investors aren't going to hand over their cash without making sure all the legal ducks are in a row.

As Omeed pointed out, any accredited or institutional investor worth their salt is going to dive deep into your company's paperwork during due diligence. That means having all the necessary agreements – from founder's agreements to board resolutions – squared away well in advance.

So, if you're eyeing that Series A round you better believe that the co-founder agreement needs to be inked and ready to roll. It's not just about dotting the i's and crossing the t's – it's about showing potential investors that you mean business and that your startup is built on a solid foundation.

In short?

Don't wait until the funding rounds are knocking on your door to get your legal house in order. Get that co-founder agreement locked in early.

When to hire a legal consultant?

It all comes down to your priorities and budget.

Sure, a ChatGPT-generated agreement might be better than nothing at all, but let's be real – it's far from perfect. So, what's the next step up? Hiring a lawyer for an hour of consulting. It might cost you a bit more, but having a legal expert review your agreement and break it down in plain English could save you a world of headaches down the line.

If you're really serious about protecting your startup's future, Omeed's advice is clear: investing in a lawyer to handle the entire agreement process is the way to go. From start to finish, having a legal expert by your side ensures that your agreement accurately reflects your needs and protects your interests.

Of course, if budget constraints are a real concern, there are still options available. Platforms like Rocket Lawyer offer affordable template agreements that can serve as a starting point.

Bottom line?

When it comes to something as crucial as a co-founder agreement, cutting corners isn't worth the risk. Whether you opt for a full-service legal package or just a brief consulting session, ensuring that your agreement is watertight is key to safeguarding your business future and even personal relationships with co-founders.

How much does it cost?

It's no secret that startups operate on tight budgets and every dollar counts. In terms of legal expenses, some founders might balk at the idea of spending big bucks on lawyers instead of investing in growth areas like marketing or hiring.

But here's the good news: getting your hands on a solid co-founder agreement doesn't have to break the bank. For a comprehensive incorporation package, including all the necessary documents to kickstart your company, you're looking at around $2,500. That covers everything from operating agreements to founding documents and more.

And when it comes to that all-important co-founder agreement itself? Well, you're looking at around $700 to $800. Not exactly pocket change, but certainly a worthwhile investment considering the peace of mind it brings.

Co-founders agreement template (GIFT)

?? Gift from Omeed - a comprehensive co-founder agreement template!

??Claim it by connecting with Omeed Tabiei, Esq. on LinkedIn

Watch the full video on YouTube and discover other hidden gems:

• Horror stories and how to avoid them
• Frameworks to split the equity
• Mistakes to avoid
• Is it a must-to-have to enter the US market
• Additional tips for equity distribution
• Ask WHO, not HOW

Looking for investors? Join our next live event!

Join us for a practical Q&A session with Mike Handa for SaaS founders seeking funding. In this exclusive interview, we'll talk about preparing for impactful conversations with investors. ?????

LinkedIn loves fooling around with live video events ??

So we created a Zoom event as plan B.

?? Register via Zoom to access our live call to ask Mike your questions and get the recording .

See you there! ?? ?? ??