Shareholders agreement for a tech startup before seed funding

Founders of a technology startup who are about to raise money will be handed a set of investor documents that replace whatever they have, and founders who have nothing before that point have left the questions investors ask (who owns the code, what happens if a founder leaves, how much is the pool) to be answered in a negotiation they do not control. A founders' agreement before seed settles those questions among the founders, assigns the IP into the company, and puts vesting in place on the founders' terms rather than the investor's. I draft that agreement for the founders together, with a briefing session and a note on how it fits the articles, for a fixed fee of £995, delivered in five working days.

Who this is for

Founders in England and Wales of a software, hardware or digital startup who have incorporated, are building the product, and expect to raise a seed round within a year or two.

What matters in a pre-seed founders' agreement

Founder vesting before investors require it

Investors require founder vesting as a condition of investment, and founders who agree it among themselves first choose the terms: a vesting period of a few years with a cliff, acceleration on a sale, and the treatment of shares already earned by the time of the round; the agreement, with matching articles, provides that a founder who leaves before full vesting transfers unvested shares back at nominal value, with good and bad leaver terms for vested shares, which protects each founder from the others leaving early and gives the seed investor what it would have asked for.

Intellectual property assigned into the company

Code, designs, data and the product written by the founders before and after incorporation belong to the founders personally under section 11 of the Copyright, Designs and Patents Act 1988 unless assigned, and investors will not invest in a company that does not own its product; the agreement should contain an assignment by each founder to the company of all IP in the business, in writing under section 90, covering past work, with moral rights waived, and a confirmation that no founder's former employer has a claim, which is the question every investor's lawyer asks first. Open source used in the product should be recorded.

Roles, commitment and the founder with a day job

The agreement should record each founder's role and title, the time each commits (full time, or a stated commitment until a funding milestone), what each is paid or deferred, and the obligations of a founder who keeps another job: no competing interests, the employer's IP position confirmed, a date by which they join full time or their vesting changes; founders who hold equal shares for unequal commitments will resent it by the seed round, and the agreement should settle the split now, with the option of adjusting on milestones.

The option pool and the first hires

The founders should decide now how large an option pool the company will create for employees and advisers, from which it comes (new shares diluting everyone, or founders' shares), and under which scheme (Enterprise Management Incentives under Schedule 5 to the Income Tax (Earnings and Pensions) Act 2003 for employees who qualify), because a seed investor will require a pool and prefers it to be created before its investment so that the dilution falls on the founders; advisers receive unapproved options or shares outside EMI, and the agreement should set the approval process for all grants.

Preparing for the seed round and what will change

The agreement should say that it will be replaced or amended by the seed round documents, that each founder will sign what the round reasonably requires (a new agreement, articles, a service agreement, vesting), how the founders decide to accept an offer, and that the founders' pre-emption rights under section 561 of the Companies Act 2006 are waived for the round; it should also record the company's cap table as it stands, any convertible loans or advance subscription agreements already given, and any SEIS or EIS advance assurance obtained under the Income Tax Act 2007, so that the round starts from a known position.

Founder exits and the company's survival

Beyond vesting, the agreement should provide for a founder's departure: the leaver provisions and valuation, the handover of access, code and accounts, confidentiality and restrictive covenants for a period after leaving, and the remaining founders' right to continue the company; for deadlock between two founders a resolution mechanism; and for a founder's death or incapacity, the company's or the other founders' right to acquire the shares at a stated value. The note on the articles addresses the compulsory transfer provisions, which must be in the articles to bind the shares under section 33 of the Companies Act 2006.

What it costs

Shareholders agreement, £995. An agreement between the shareholders of a private company, with a note on how it interacts with your articles. Five working days.

Buying online forms the engagement on payment. The scope is what the shareholders agreement page describes, you accept the Terms of Service at checkout, and I email you within four working hours to get started. If you would rather ask something first, email me.

What you get

• A briefing session with all shareholders together, to work through the questions people avoid asking each other
• A shareholders agreement drafted for your actual situation rather than a precedent with the names changed
• A note on how the agreement interacts with your articles, and whether the articles need amending to make it work
• A plain English explanation of every material choice, so nobody signs something they have not understood
• One round of amendments
• Signature-ready documents

What is not included

• Acting for individual shareholders separately, because I act for you jointly
• Company valuation
• Tax structuring, which needs your accountant and should run alongside this
• Amended articles of association and IP assignments, which I quote separately
• Filing at Companies House
• Resolving a dispute that has already started

Questions I am often asked

Investors will replace our agreement anyway. Why have one now?

Because the questions investors ask (who owns the IP, what happens if a founder leaves, how big is the pool) are better answered among the founders on their own terms than in a term sheet negotiation. The agreement also assigns the IP into the company, which the round cannot proceed without.

One founder wrote all the code before we incorporated. Who owns it?

That founder, personally, until it is assigned to the company. The agreement contains the assignment, which is the document the investor's lawyers will ask to see.

Should vesting apply to shares we already hold?

Investors will expect it, usually with credit for time already served. Agreeing it now among the founders, with a cliff already passed, puts you in a better position than having it imposed.

Related guidance and services

• Shareholders agreement, £995, the service this page describes
• Contract review, £495
• Employment contracts and handbooks, £595
• Shareholders agreement with vesting and good and bad leaver terms
• Shareholders agreement when bringing in an angel investor

This page is general guidance for businesses in England and Wales, not advice on your own circumstances. Last reviewed: October 2026. Email geoffrey@caesar.co.uk.