Issue 001
Plain English Law for Indian Founders Issue #001 · By Kashvi Jain, Ameko
The one document every co-founded startup is missing
Let me tell you how I see this play out.
Two friends start a company. They trust each other completely. They think a founders’ agreement is something you do “later, when things get serious.” Then one of them gets a job offer at a well-funded startup. Or wants to move cities. Or just stops showing up.
And suddenly they’re in a conversation with no legal framework to stand on.
This is the most common early-stage legal disaster I see. And it’s almost entirely avoidable.
What is a founders’ agreement?
A founders’ agreement is a contract between the co-founders of a startup that answers questions like:
- Who owns what percentage of the company — and how is that ownership earned over time?
- What happens if a founder leaves in year one? Do they keep their full stake?
- Who has decision-making authority over what?
- What happens if the founders disagree on something major?
- Can a founder start a competing business after leaving?
None of these feel urgent when you’re in the middle of building. All of them feel very urgent the moment something goes wrong.
The part founders skip: vesting
Here’s the thing most people don’t know. In India, it’s common for founders to split equity 50/50 (or whatever the agreed ratio) upfront — with no vesting schedule attached.
This means if your co-founder leaves six months in, they walk away with their full equity stake. And you’re now a solo founder running a company with a 50% shareholder who’s not in the building.
A vesting schedule fixes this. The most common structure: equity vests over 4 years, with a 1-year cliff. Translation: if a founder leaves before one year, they get nothing. After that, they earn their equity gradually, month by month.
This is standard in most funded startups globally. It’s surprisingly rare in early-stage Indian startups — until it’s too late.
What you should do
- If you have a co-founder and no founders’ agreement: stop reading this and go fix that this week.
- If you’re about to incorporate: do the founders’ agreement at the same time. Not after.
- If you have an agreement that’s older than 18 months: review it. Things change — roles, ownership, business direction. The document should reflect where you actually are.
The agreement doesn’t have to be 40 pages. A well-drafted 6–8 page document covers the important stuff.
One line summary
A founders’ agreement doesn’t mean you don’t trust your co-founder. It means you both agree on what happens if the trust breaks down — before it does.
Next week: GST registration — who actually needs it, when, and what happens if you get it wrong.
Questions? Reply to this email. I read everything.
— Kashvi Founder, Ameko | ameko.in
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