FOUNDERS

Before the company is established and any money has been raised, a few key individuals must invest tremendous time, energy, and/or their reputations into the venture. Founders are identified by the risks they take and the contributions they make. Sometimes it is not clear who should be considered a founder until after the company has been financed and launched operations. A founder may join the management team or serve as a director, scientific advisor, or consultant. For example, when a university investigator starts a company and wants to retain his academic post, university policies may forbid him from also holding a management position in the company. A founder may even choose not to remain involved with the company once it is established.

Entrepreneurs riddled with startup anxiety may seek relief by quickly surrounding themselves with people who are interested in the startup but not dedicated enough to truly be considered founders. No matter how much you may like someone or how much you want to consider that person a partner, don't calling them a founder until he or she has actually made a contribution to the venture. You may find it difficult and painful to revoke founder status from someone after you discover he is unable or unwilling to contribute anything of value. Do not sign any contracts or make any binding verbal agreements without first consulting an attorney.