What are the essential ingredients of startup legal documents?
In developing a streamlined, cost-effective set of legal formation documents for startups (organizational, not funding documents), I have been giving a lot of thought to the essential areas that entrepreneurs/new companies need to cover. It’s not a huge universe. Here’s what I have come up with:
- Ownership split (if more than one founder) and vesting.
- Founder capital commitments.
- Management of the company/who’s on the board?
- Whether/how founder equity can be transferred. Under what conditions?
- If multiple founders: Can someone be forced to leave?
- What happens to a founder’s equity if she or he departs, whether voluntarily or involuntarily?
- Assignment of rights to all property created pre-formation by the founders to the new company.
That’s it, in my view. The rest is detail. Some important detail, mind you, but detail nonetheless.
What do you think?