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  • Writer's pictureAnna Mazarsky

Did you know that having (or not having) a founders' agreement affects your fundraising potential?

I recently met with Sharon Gazit, the Head Corporate and Technology Department in one of Israel's largest Law firms (they "only" represent hundreds of startups across their lifecycle).

During our meeting, we discussed many things, among them - the matter of founders' agreements. And what can I tell you - up to this point, I admit that I wasn't fully aware of the consequences of NOT having one - on my clients and on their fundraising efforts.


Other than this being an important legal doc for the founders themselves, as it clearly sets the course and prepares them for any potential breakups along the way, it can actually affect the way investors see the company!


Because let's face it, in the early stages of a startup, it's like being on a honeymoon. Everything seems clear and full of potential; the founders are too busy building the future, and its opportunities - and so can neglect to see the "small" things.

And once the magic of starting out fades away - the reality kicks in, issues can arise, and other challenges with them. So what happens if one of the founders wants out? What happens if a black cat crosses their paths and they don't get along anymore?


This is actually one of the concerns of early-stage investors, who, in most cases, invest in the people, the entrepreneurs - more than they invest in the technology or the specific solution.

And so, by clearing these issues at the onset of the company, the investor can be more confident in knowing that even if trouble visits paradise - they already have agreed-upon solutions, which won't cause the investor to lose just because of the human factor.


So, if you're an early-stage startup with no founders' agreement, now is a great time to draft and sign one. May it be the first of many growth agreements that will set you on the road to success.


Let me know what you think and if you have further matters and questions that you'd like me to discuss,

and Happy fundraising!


Anna,

Founder & CEO

pitchUP - startup fundraising solutions


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