8 ESSENTIAL CONTRACTS EVERY STARTUP NEEDS
May 16, 2025
Randy S. Kramer


8 ESSENTIAL CONTRACTS EVERY STARTUP NEEDS
Many founders believe that legal documentation can wait. They are wrong.
A single vague or ambiguous clause—or the absence of a critical clause—can jeopardize everything you’ve created. Whether dealing with an investor, co-founder, supplier/vendor, employee/contractor, or the public, contracts are your primary safeguard and first line of defense.
These are the 8 vital contracts every startup should have:
1. Founders’ Agreement
They matter because: They align equity, define roles, establish ownership of intellectual property (IP), and outline exit strategies.
They help avoid: Potential conflicts that could fracture the company.
2. Non-Disclosure Agreements (NDAs)
They matter because: They shield your ideas during preliminary discussions.
Use them with: Prospective hires, collaborators, and investors before divulging sensitive and confidential information.
3. Employment and Contractor Agreements
They matter because: They specify responsibilities, safeguard IP, and prevent misclassification.
Be sure to include: Non-disclosure agreements (NDAs), non-compete clauses (if permitted by law), and IP assignment terms.
4. Sales or Service Agreements
They matter because: They clarify payment terms, delivery schedules, and liabilities.
They protect against: Scope creep, late payments, and disputes.
5. Supplier or Vendor Agreements
They matter because: They ensure reliability and accountability in your supply chain.
Essential clauses: Deadlines for delivery, payment terms, penalties, and mechanisms for dispute resolution.
6. Terms of Use
They matter because: They create the legal framework for the use of your website or app.
They protect against: Misuse and unclear customer responsibilities.
7. Privacy Policies
They matter because: Businesses must comply with privacy and data protection regulations (e.g. EU and UK GDPR, CCPA, PIPEDA).
They protect against: Complaints, fines, and lawsuits for failing to ensure people's privacy or protect their data.
8. Investment Agreements (Convertible Notes, SAFEs, or Equity)
They matter because: They set out terms related to investor capital, such as valuation caps, discounts, and liquidation preferences.
They protect against: Loss of control of your company.
FOOD FOR THOUGHT
Bad contracts can ruin you. Don’t copy/paste your legal foundation. Build it correctly from the start.
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