What is reverse vesting in an Indian startup co-founder agreement?

Reverse vesting means that founders receive their equity upfront upon incorporation, but the company retains a repurchase option to buy back unvested shares at nominal face value (e.g. ₹10 per share) if a founder leaves before completing the vesting period (usually 4 years with a 1-year cliff).

Why is an IP Assignment clause essential in a founder agreement?

Under Indian Copyright Act 1957 and Patent Act 1970, IP created by an individual belongs to the individual author unless assigned in writing. Without an IP Assignment agreement, a departing co-founder can claim personal ownership of the startup's code, algorithms, or brand.

Startup Co-Founder Agreement Generator India (2026)

Co-Founder Particulars

Company name, equity split & vesting

Proposed / Existing Company Name *

Founder 1 Full Name *

Founder 1 Role *

Founder 2 Full Name *

Founder 2 Role *

Founder 1 Equity (%) *

Founder 2 Equity (%) *

Vesting Schedule *

Cliff Period *

Deadlock Resolution Clause *

Vesting Acceleration *

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Companies Act 2013

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Why Every Startup Needs a Co-Founder Agreement on Day 1

The #1 killer of early-stage startups in India is founder disputes. When co-founders split equity 50/50 without a written agreement, any founder who departs six months into the journey walks away owning half of the company's equity forever. This "dead equity" makes the startup completely un-investable to venture capitalists and angel investors.

This agreement safeguards the venture through four fundamental mechanisms:

Reverse Vesting: Equity is earned over 48 months. If a founder leaves before month 12, they forfeit 100% of their equity.

Irrevocable IP Assignment: Ensures that all code repositories, domain names, algorithms, and designs developed by either founder belong solely to the company.

Good Leaver vs. Bad Leaver: If a founder commits fraud or leaves voluntarily to launch a competing venture, the company buys back all their shares at nominal ₹10 face value.

Deadlock Resolution: Prevents 50/50 operational paralysis using shotgun buy-out or structured dispute resolution.

Frequently Asked Questions on Co-Founder Agreements

When should this agreement be executed?

This agreement should be executed as soon as two or more founders start writing code, pitching customers, or incorporating a private limited company. It can be executed before incorporation and subsequently ratified by the Board of Directors under Section 179 of the Companies Act 2013.

How should this agreement be stamped?

In most Indian states, a co-founder agreement should be executed on non-judicial stamp paper of ₹200-₹500 value under Article 5 of the State Stamp Act (Agreement not otherwise provided for) and notarized.

Co-Founder Particulars

Why Every Startup Needs a Co-Founder Agreement on Day 1

Frequently Asked Questions on Co-Founder Agreements

When should this agreement be executed?

How should this agreement be stamped?

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