Who Is a “Founder”?

The term “Founder” is commonly applied to those who were instrumental in creating a new enterprise. Founders are “present at the creation” and play a key role in forming the company.

Bestowing the title of “Founder” does not itself give the Founder any special legal rights under US law because the title “Founder” has no independent legal meaning.  Whatever rights a Founder may have are defined by the agreements entered into when the company is formed.

Give serious thought about whether you want someone memorialized as a “Founder” of your company.  If that person ends up not working out as a team member, they will always be known as one of your co-founders.

In hindsight, successful companies have many more people who label themselves as “Founders” than unsuccessful companies.  This is simply an example of the maxim that “success has many parents but failure is an orphan.”

You can also check out my other article Founder Basics: Founder’s Stock, Vesting and Founder Departures.