Startup Lithuania pre-acceleration course: Startup Guide

Exercise 3.4.2. Investor-founder partnership expectations

Investor-founder partnership expectations

After you know who your partner is, you give promises and you expect some in return. It’s important to know what usually are the main expectations from each side. 

Investor expectations:

  1. Commitment period. It is expected that the founder will work on a startup for a certain period of time. This is indicated in investment documents and usually is 2-4 years.
  2. Vesting, good and bad leaver. These definitions are important and related to the shares held by the founders. Investors expect that the founders team will work for the company and will not will not leave while still having their shares. Vesting period means that if you leave the company earlier you will lose all your shares. Then the questions arises of how much you might get paid for those shares.  The vesting period is usually is also 2-4  years.
  3. Devoted time. This concerns how much time the founders will spend during the day working on the startup. Usually it’s expected that founders will devote all their time but sometimes it can be agreed on giving some time for other activities of the founders such as giving lectures etc.
  4. Lock-in period. This is the time when the founders are not entitled to transfer the shares to another party or buyer. The period usually lasts around 3 years. 


Founder expectations:

  1. Remuneration.  Because founders are obliged to work at least three years for the company they want to know how much will they get for this work.  Remuneration is approved in the company’s budget which is approved by the board of the company or in other forms where investors also participate. 
  2. Remaining in the management team. Investors might wish to change some team members, so before entering into an investment agreement it’s important that both parties agree what each founder is responsible for and whether they will remain in the management team either as a director or  in some other position. 

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