Starting a business with a co-founder feels like a dream at first. You’re both bursting with ideas, fueled by late-night brainstorming sessions, and convinced you’re building the next big thing. But fast-forward a few months, and reality kicks in—money, responsibilities, decision-making, and pressure from investors.
Suddenly, things get complicated. Who owns what? Who makes the final call? What happens if one person loses interest or wants out?
This is why every startup partnership in Africa needs a solid co-founder agreement. It’s not just paperwork—it’s startup insurance, protecting the business and the relationship. Let’s break down exactly what your agreement should cover.
1. Equity Split: Who Owns What?
Money conversations can get awkward, but nothing ruins a startup faster than an unfair equity split. In Africa, where informal partnerships are common, many founders skip this step—until disagreements arise.
- Will you split equity 50/50? (Hint: This isn’t always the best approach)
- Should one co-founder get more for bringing in funding or expertise?
- What happens if a co-founder leaves early—do they still own their shares?
Pro Tip: Use a vesting schedule to ensure co-founders earn their shares over time rather than all at once. If you’re considering raising funds, understanding the best funding model—whether SAFE, convertible notes, or direct equity—can help secure your startup’s future. Check out this guide on startup funding models to explore the best approach for your business.
2. Roles & Responsibilities: Who Does What?
A startup is not a democracy where everyone does everything. Without clear responsibilities, tasks get duplicated—or worse, ignored.
- Who is the CEO, handling vision, strategy, and investors?
- Who is the CTO, leading product development?
- Who manages operations, marketing, or finance?
Define these roles early to avoid power struggles and micromanagement.
3. Decision-Making: Who Has the Final Say?
Imagine this: One co-founder wants to raise funds; the other prefers bootstrapping. One wants to expand into Kenya; the other wants to dominate Nigeria first. Who wins?
- Will decisions be unanimous or majority-based?
- Does one co-founder have veto power over key business areas?
- What if there’s a deadlock—how do you resolve it?
Having a clear decision-making framework avoids emotional, ego-driven fights.
4. Exit Strategy: What Happens If Someone Leaves?
Co-founder breakups are more common than failed startups. If one person walks away, does the other buy their shares or does the startup collapse?
- If a co-founder quits, do they keep their equity, or does the company buy it back?
- What if a co-founder underperforms—can they be removed?
- How is valuation calculated if one founder wants to sell their shares?
Without a clear exit clause, you could end up in endless legal battles or lose control of the business.
5. Compensation: Salary or Sweat Equity?
Startups are unpredictable. Some founders take salaries, while others work for equity. But what happens when money starts coming in?
- Will you pay salaries, or does everyone work for free until funding comes?
- What happens if one founder needs money sooner than the other?
- How do you prevent disputes when funding arrives?
Define compensation early to avoid resentment and financial stress.
6. Funding & Financial Decisions
Raising money isn’t just about signing a check. Investors will ask tough questions, and co-founders must be aligned on financial decisions.
- Who approves funding rounds and equity dilution?
- How are company expenses tracked and approved?
- What’s the plan for profit-sharing?
Having clear financial protocols ensures transparency and keeps the business running smoothly.
7. Intellectual Property: Who Owns What?
If your startup is building a patented product, software, or unique idea, you need to protect it. What happens if a co-founder leaves and takes the idea with them?
- All intellectual property (IP) created should belong to the company—not individuals.
- Include a non-compete clause to prevent founders from starting a rival business.
- Clarify how IP rights are handled if the company shuts down.
Many startups lose control of their ideas because they didn’t secure IP rights from the start.
8. Conflict Resolution
No matter how aligned you are today, disagreements will happen. The key is having a system in place before things spiral out of control.
- If there’s a dispute, do you mediate internally, or bring in a third-party advisor?
- Will you follow an arbitration process, or can issues go to court?
- How do you handle a scenario where one founder feels marginalized?
A structured conflict resolution plan prevents small issues from turning into legal battles.
9. Legal Framework: Registering & Protecting the Business
Many African startups operate informally for too long. Without legal registration, equity agreements and financial structures are meaningless.
- Register your business (Limited Liability Company, Partnership, etc.)
- Ensure the agreement aligns with local startup laws in your country.
- Work with a lawyer experienced in startup agreements.
A legally sound co-founder agreement ensures credibility with investors and avoids future disputes.
A co-founder agreement is not just a formality—it’s a roadmap for success and conflict prevention.
If your agreement covers these essentials, your startup is on solid ground. If not, take the time to get it right—because nothing ruins a great business faster than a bad partnership.
