In this blog post, Tolis Dimopoulos answers a question he is frequently asked: when and how should entrepreneurs formalize their relationship with their co-founder? The downside of doing this too early is the hassle and expense of forming a company around an idea which ultimately goes nowhere. The downside of formalizing too late is that it magnifies risks of a personal falling out, which could lead to one of the parties walking away with the intellectual property, leaving the other with no recourse.
Mr. Dimopoulos explains that the "how" is important, too, citing (as an example) the needless expense of switching from one corporate form to another. He goes into much more detail about the considerations going into the hows and whens of the formalization decision, too.
- Summary by FizzLaw Team
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Formalizing Relationships with Co-Founders