In order to create the best founders team possible it is key to find the right balance between the co-founders. Each co-founder should have an irreplaceable set of knowledge and skills that help develop the company. The following provide guidelines to ensure you have the best team:
(1) It is best to have written agreements completed before pre-incorporation. This helps keep power equal among the co-founders.
(2) Each founder should be involved in vesting and, ideally, a vesting cliff should be made.
(3) Clarify voting thresholds. Ownership among founders can be touchy. It is important to avoid giving one founder too much power.
(4) Severance packages should be made with caution. If one founder is able to call in his/her “loans” when he/she leaves the company this could create a major funding issue.
(5) Avoid giving official titles to board members. It is best to maintain flexibility concerning which founder is doing what on the board. Setting board term limits, and switching which founder is on the board from time to time, are both possible approaches.
(6) Start-ups should do everything they can to have strong boards that are able to function independently. Start-ups frequently ask friends to be on the board. This is fine as long as the friend has the company’s best interest in mind above all else.