The Founder's First 90 Days: Incorporation, Vesting and the Agreements That Prevent Future Fights

Most founder disputes you read about — the ones that cost equity, time, or the company itself — were preventable with three documents and one weekend of work in the first 90 days. Here is what to set up, in what order, and the traps to avoid.

Step 1: Pick the right structure (almost always Ltd)

UK private company limited by shares (Ltd) is the default for ventures intending to raise external investment. LLP and sole trader structures cannot issue shares, cannot grant SEIS/EIS relief, and cannot operate option schemes — all dealbreakers for VC and angel funding.

Step 2: Issue founder shares with vesting

Vest from day one. Standard is a 4-year vesting schedule with a 1-year cliff. Without it, a co-founder who leaves in month four walks away with a quarter of the company forever. With it, they leave with nothing — and the company gets the equity back.

Use reverse vesting, not options. Founders own the shares from day one but the company has the right to buy them back at nominal value if the founder leaves before vesting completes. This protects SEIS/EIS eligibility for investors later.

Step 3: The three agreements every founder needs

• Articles of Association — the company's constitution. Use a model that supports investor preference shares, not the default Companies House template.
• Shareholders' Agreement — what happens when you raise, when someone leaves, when you sell. Covers drag-along, tag-along, pre-emption, board composition.
• IP Assignment Agreement — every founder, contractor and early employee assigns all IP created for the company to the company. Without this, your IP technically belongs to whoever wrote the code.

Step 4: Open a real business bank account and keep clean books

Mixing personal and company expenses is the single fastest way to lose SEIS/EIS eligibility, fail R&D claims, and look amateurish in due diligence. Get a proper account on day one — Tide, Starling, Mettle all open in 24 hours.

Common 90-day mistakes

• Splitting equity 50/50 'to be fair' without vesting — the recipe for a deadlock.
• Using free template Articles that block preference shares — investors walk away.
• Forgetting to issue founder shares formally (just 'agreeing' verbally) — you do not own what you think you own.
• Hiring a friend as a contractor with no IP assignment — you cannot ship without their permission later.