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An Introduction to Founder Services Agreements on Clara
An Introduction to Founder Services Agreements on Clara
Updated over a week ago

Set out the details of all the services that the founder will provide to the startup.

What is a Founder Services Agreement?

A Founder Services Agreement sets out the terms of each founder’s engagement (the establishment of a working relationship), and the services they will provide to your startup’s topco.

Why generate this document?

This document is often requested by investors, especially where they have more input, visibility, or a seat on the board of directors.

What does a Clara Founder Services Agreement do?

  • Covers the following key areas: description of services the founder will provide, the time commitment of the founder (full time or another arrangement), working location and confidentiality obligations.

  • Has the option to make the founder's shares subject to reverse vesting and setting out those vesting terms (cliff, vesting period, vesting frequency and leaver provisions).

  • States the founder’s monthly salary (but not the terms on which any equity is held by the founder – this is covered in the Founders' Agreement). 

  • Allows the startup to terminate the founder's engagement if the founder does not comply with the board's directions or does anything which could damage the startup’s reputation.

  • Is governed under English law with a dispute resolution mechanism using expedited ICC arbitration procedures to be held in a place you can select in the form.

Clara recommends...

  • Very carefully reviewing the termination triggers under this agreement - they can often work alongside any good leaver/bad leaver provisions that may apply to a founder and the vesting of their shares. 

  • Protecting your startup with an Intellectual Property Assignment Agreement and a Non-Compete Agreement which includes customary non-compete and non-solicit provisions.

  • Considering whether separate Employment Agreements are needed with the founders (Clara has one for Abu Dhabi Global Market and one for Dubai International Financial Centre). Check the local employment laws in the jurisdiction where your startup operates to find out what’s required.

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