A cofounder IP assignment agreement is the signed document that moves what each founder builds, from code to designs to product ideas, into the company. Without one, that work may still belong to the person who made it. Sign it when you set up the company, include anything built before that date, and get one from every contractor too.
This is general information, not legal advice. The rules differ between countries and states, so have a lawyer draft or check yours.
Doesn't the company already own what we build?
Not necessarily. Founding a company together does not, on its own, move ownership of your work into it. Without a proper assignment, a law firm guide for founders warns, key assets may legally belong to the individuals who created them, not your company.
The gap is widest for work done before the company existed: the first prototype, the original deck, the early code. PatentPC's due diligence guide says that work needs a clear assignment document transferring those rights into the business, or it may still belong to the individual. Teams find this out in a cofounder agreement review, or worse, in an investor's diligence list.
What should the agreement cover?
Three kinds of work, each in writing.
| Work | What to do | Common gap |
|---|---|---|
| Before the company existed | List it and assign it by name | A clause that only covers work done "during employment" |
| From now on | Assign everything each founder makes for the company | Wording that only promises to assign later |
| Contractors and advisors | A separate signed assignment for each person | Assuming that paying for the work means you own it |
On the last row, PatentPC is direct: payment alone does not transfer ownership. Ask your lawyer to check that your wording transfers ownership now, and does not just promise to do it later.
When should you sign it?
Right after the company is formed. Zegal's founder template notes that after the company has been established the founders should assign the IP to the company, because from then on the business is the company itself.
A good order for a new team:
- Set up the company.
- Sign IP assignments at the same time as your vesting schedule and role agreement.
- List any work from before the company and assign it.
- Get every contractor's assignment signed before they start, not after their first pull request.
The document is the same length in month one or month twenty-four. What grows is the number of people whose signature you need, and the chance that one of them no longer wants to give it.
Why does a missing assignment turn into cofounder conflict?
Because unowned work becomes a bargaining chip. A co-founder who leaves on bad terms, or never got round to signing, finds that their name on the code gives them a say in the exit terms. What was an oversight in the founding sprint becomes a negotiating position in a breakup.
This is the same failure behind much cofounder equity resentment: something that should have been written down was treated as understood. Ownership and equity are different mechanisms, but they fail for the same reason. Talk about IP in the same conversation as how you split equity.
What does it cost you in a fundraise or sale?
Time, and sometimes the deal. Investors, Sandberg Phoenix notes, need assurance that the company they are investing in actually owns what it claims to own. If a past contributor is missing from the paper trail, buyers will want that gap closed before the deal closes, and an uncooperative one can pause or restructure the deal.
Check open-source use at the same time. PatentPC warns that some open-source licenses require that any changes be shared, and ignoring those terms can put the codebase at risk in a sale.
If you have not covered this yet, the free cofounder alignment check shows where else you and your co-founder are still running on assumptions.
Frequently asked questions
- What is a cofounder IP assignment agreement?
- A signed document in which each co-founder transfers to the company the intellectual property they create for it: code, designs, product ideas and know-how. Without it, that work may still belong to the person who made it. Investors and buyers check for these documents because they need to know the company owns its own product.
- Does a startup automatically own what its founders build?
- Not necessarily. Without a signed assignment, IP can stay with the individual who created it, especially work done before the company existed. Founding a company together does not move ownership by itself. The rules differ between countries and states, so ask a lawyer what applies where you are, and sign the assignment either way.
- When should cofounders sign an IP assignment?
- As soon as the company is set up, alongside your founders agreement and vesting schedule. Name any work done before that date and assign it too. Signing early is easy because everyone still agrees. Signing during a fundraise, a sale or a co-founder exit means fixing a gap under pressure.
- What happens if a cofounder never signed and then leaves?
- The company may not clearly own what that person built. Buyers and investors will want the gap closed before a deal goes ahead, and a departed co-founder who will not cooperate can stall or reshape it. You can ask for a signature later, but someone who left on bad terms has little reason to give one.