What Founders Should Check Before Signing
This is not a checklist of contracts a startup needs — see the startup contract stack for that. This is what you, personally, as the person signing, should understand before you do.
A founder should personally understand the dilution and control implications of any investment document before signing, confirm what actually needs board or shareholder approval versus what a founder can sign alone, check whether the company genuinely owns its IP, and know when a personal guarantee is being asked for inside an ordinary-looking vendor or lease contract.
What Founders is actually responsible for
- Understanding what dilution and control a founder is actually agreeing to in investment terms, not just the valuation headline
- Knowing which contracts need board or shareholder approval and which a founder can sign unilaterally
- Confirming the company — not a founder personally, and not a pre-incorporation collaborator — actually owns the IP it depends on
- Recognising when an ordinary vendor or lease contract is asking for a personal guarantee
- Setting vesting and leaver terms among co-founders before there is anything valuable to disagree about
Contracts founders touches most
Each links to what our lawyers check in that document.
Vesting, leaver terms, and equity split between founders — the document with the least room for do-overs
Where dilution, liquidation preference, and control provisions actually bite
Voting rights, drag-along/tag-along, and what happens if a shareholder wants out
As the person signing on the company's behalf as employer, not as an employee
Investor and partner conversations, where founders sign more NDAs than any other role in the company
Any deal licensing company IP in or out — check it after confirming the company actually owns what it's licensing
Where founders actually gets caught out
Signing something that needed board approval first
A founder's authority to bind the company is not unlimited — many company constitutions and investment agreements require board or shareholder consent above certain thresholds. Signing outside that authority can expose the decision to challenge later.
A personal guarantee inside an unremarkable-looking contract
Landlords and some vendors write personal guarantees into standard-looking lease or supply terms, converting a company obligation into personal liability if the company cannot pay. This is worth checking specifically, since it rarely appears under an obvious heading.
IP that was never actually assigned to the company
Code or designs created before incorporation, or by an early contributor without a signed assignment, may legally belong to that person, not the company. Investors check this in diligence, and it is far easier to fix before a departure than after.
A liquidation preference stack nobody modelled at realistic exit values
Each round's preference terms compound. A founder who only checked their own round's terms, not how they interact with earlier rounds, can be surprised by how little a moderate exit actually returns to founders.
Clauses that matter most here
Plain-English explanations of the terms that carry the most weight for this role.
Frequently asked questions
The liquidation preference (and how it stacks with earlier rounds), anti-dilution provisions, board seats and protective provisions being granted to the investor, and what control rights the founder is giving up beyond the headline valuation and ownership percentage.
Have something specific to check?
Upload it for a free Contract Health Check, and a lawyer will tell you exactly what to change.