The shareholders’ agreement is one of the most undervalued documents in the early stages of a startup. Initially, enthusiasm often takes over, and it is common for founders to postpone or underestimate the importance of formally regulating their relationship. However, a well-structured startup shareholders agreement not only helps avoid disputes but also conveys professionalism and stability to potential investors.
Many entrepreneurs make mistakes that can lead to serious consequences later on. Some of the most common include :
- Over-relying on personal relationships between shareholders: friendship matters, but business requires clear rules. Trust is no substitute for a solid legal framework.
- Using generic or copied agreements: Every team and every startup has unique needs. A standard document may overlook key scenarios.
- Failing to update the agreement: The startup shareholders’ agreement should be reviewed after each funding round or when there are changes in shareholders’ roles or company strategy.
- Not formalising a shareholder’s agreement in Spain: this mistake is usually frequent when founders or investors have signed similar agreements in other jurisdictions. Foreign arrangements do not replace the need for a document tailored to Spanish law, one that properly regulates the specific operations of the Spanish entity and ensures full legal validity before local courts.
In short, a strong startup shareholders agreement not only protects against conflicts but also anticipates future scenarios, sets clear ground rules, and supports the long-term stability of the project.
Below, we review some of the most relevant clauses of the startup shareholders agreement.
Key clauses in the startup shareholders agreement
Vesting clause
A mechanism that ties the actual acquisition of shares by the founders to their continued involvement in the project. Typically, it includes an initial cliff period followed by a progressive vesting schedule. This clause prevents a founder who leaves early from keeping a substantial equity stake.
Preferential liquidation clause
Grants priority to certain shareholders (generally investors) to recover their investment in the event of a sale or liquidation of the company before distributing the benefits to other shareholders.
Weighted average anti-dilution clause
Protects investors in later funding rounds if the company is valued below the price they initially paid. This clause adjusts their participation proportionally and more moderately than other anti-dilution mechanisms.
Founders lock-up clause
Establishes a period during which the founding shareholders cannot sell their shares. It aims to ensure long-term commitment and provide security to new investors.
Intellectual Property Assignment
Guarantees that software, code, designs or other intangible assets created by the founders belong to the company rather than to them personally. This clause is essential to secure the value of the startup.
Fast-track dispute resolution
Prevents conflicts from escalating or turning into prolonged litigation. The agreement can include mechanisms such as mediation or fast-track arbitration.
Gin&tonic clause
Under this informal name hides a useful clause: in the event of a deadlock, it encourages the parties to meet in person to discuss the issue directly and reach an amicable solution. It seeks to preserve personal relationships even in the event of a professional split.
Deadlock resolution
To avoid total paralysis in decision-making when shareholders are deadlocked, the agreement may include mechanisms such as Russian roulette, cross-option auctions, or even forced sale provisions. These practical tools guarantee the project’s ongoing viability.
If you need additional information regarding drafting, revising or updating a startup shareholders agreement,
