Early-stage startup agreements matter more than you probably realise. A shareholder agreement that is poorly negotiated can give an investor the right to drag you out when the company is sold, even if you do not want to sell. A founder agreement that does not document everyone's equity can lead to catastrophic disputes years later. A loan agreement with unclear repayment terms can create unexpected cashflow crises. For just £99, get a complete review so you understand what you are committing to before things go wrong.
You are probably in one of these scenarios
An angel investor or venture capital firm wants to invest in your startup, and they have sent a shareholders agreement. It is 30 pages long and full of clauses you do not fully understand. What is a drag-along right? What does the anti-dilution clause mean for your future equity? What happens to your shares if you leave the company? A review breaks down every clause and helps you understand what you are agreeing to.
You and two friends are starting a company together, and you have verbally agreed to split equity equally. But there is no written agreement. One co-founder is now talking about leaving in six months. What happens to their shares? Do they keep them forever? Can they sell them? Can you buy them back at a discount? Without a written agreement, these questions have no clear answers. A founder agreement locks in the deal and prevents disputes later.
A family member or friend has offered to lend you £50,000 to launch the company. You need to sign a loan agreement, but you are not sure what the repayment terms actually mean. What interest rate are you paying? How long do you have to repay? What happens if you cannot make a payment? A review ensures you understand the full financial commitment before you borrow.
As a founder, you probably own some intellectual property (code, designs, processes) that the company will use. You need to assign these to the company for the business to own them properly. But the assignment agreement should be clear about what you are transferring and what happens if the company fails. A review ensures the IP assignment is fair and complete.
An experienced industry person wants to join your company as an advisor, and you are offering them equity and consulting fees. The agreement covers scope of work, payment terms, confidentiality, and IP ownership. You want to ensure it is fair to both sides and that it protects the company. A review identifies any problematic terms.
Everything you need to understand your contract
Clear explanation of drag-along rights, anti-dilution provisions, vesting schedules, and other investor protections
How the deal affects your ownership stake, what future dilution might look like, and what this means for your value
Who gets paid first if the company is sold or wound up, and how much money you will actually receive
Whether your equity vests immediately or over time, what happens if you leave, and whether terms are fair
Repayment schedules, interest rates, what happens if you cannot pay, and personal guarantee implications
Specific clauses that might be problematic and suggestions for negotiating fairer terms
These are the risks that keep people awake at night
A drag-along clause allows a majority investor to force you to sell your company and your shares, even if you do not want to. This can be catastrophic if the company is being sold for less than it is worth, or if you wanted to hold on for future growth. A startup founder was forced to sell her company for £5 million when she believed it was worth £15 million, because the lead investor triggered their drag-along rights. She had negotiated a lower stake and was forced out.
If your equity does not vest immediately or if vesting is contingent on something vague, you could lose significant equity if you leave the company early. Some founders have lost millions of pounds worth of equity because they did not understand or negotiate their vesting schedule. A one-year cliff followed by four-year vesting is standard; anything significantly worse should be negotiated.
If an investor has a 2x non-participating liquidation preference, they get 2x their money back before founders and other shareholders get anything. In a modest exit, this can mean the investor gets most of the proceeds and founders get very little. Understanding liquidation preferences is critical to understanding what your equity is actually worth.
Handshake agreements on equity never end well. One co-founder thinks they own 33%, another thinks they own 40%, and the third thinks everyone should be equal. Without a written founder agreement, these disputes are hard to resolve and can destroy the company. A founder agreement locks in equity splits, vesting, and what happens if someone leaves.
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A liquidation preference determines the order in which shareholders get paid if the company is sold or wound up. A 1x non-participating preference means the investor gets their money back first, then founders and other shareholders split the remainder. A 2x preference means they get 2x their investment back before anyone else gets anything. This dramatically affects how much money founders actually receive from a sale. Always understand liquidation preferences before you sign.
Equity typically vests over four years with a one-year cliff. This means you do not vest any equity in the first year, but if you stay, you start vesting. This protects both the company and you — the company ensures early employees are committed, and you ensure you keep earning your stake as time goes on. Anything significantly different (like immediate vesting) should be a red flag, or immediate vesting should be negotiated.
An anti-dilution clause protects an investor if the company raises a future round at a lower valuation. Instead of their stake being diluted, they get extra shares to maintain their percentage. This is bad for founders because it means the new investors are effectively taking shares from you, not just from the company. Weighted-average anti-dilution is fairer than full ratchet; try to negotiate the fairest terms possible.
Yes, absolutely. A written founder agreement is essential, even at pre-launch stage. It prevents disputes about equity, clarifies vesting, documents what happens if someone leaves, and protects the company's IP. You can use simple templates, but do not skip the formal agreement. It is the foundation of the company.
A loan agreement should specify the amount borrowed, interest rate, repayment schedule, what happens if you cannot make a payment, and what security the lender has (if any). Even between family, a written agreement prevents misunderstandings and protects the relationship. If the lender does not want interest, that can be in the agreement too. Keep it clear and documented.
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