I’ve watched three Austrian startups implode over co-founder disputes. In each case, the business was viable. The product worked. Customers existed. What didn’t exist was a proper co-founder agreement addressing what happens when founders disagree, when one wants to leave, or when the equity split stops reflecting reality.
Austrian law provides a framework for business partnerships, but it doesn’t protect you from the specific disasters that co-founder relationships face. You need an explicit agreement that goes beyond the standard Gesellschaftsvertrag—one that addresses the scenarios nobody wants to discuss when the partnership feels strong.
Here’s what that agreement needs to contain, how Austrian law shapes it, and the specific conversations you need to have before you sign anything.
Why the Standard Gesellschaftsvertrag Isn’t Enough
When you found a GmbH in Austria, the Notariatsakt creates a Gesellschaftsvertrag (articles of association) that covers the legal basics: share distribution, management structure, profit distribution, transfer restrictions. Most founders use a standard template and assume they’re covered.
They’re not. The standard Gesellschaftsvertrag addresses company governance, not co-founder relationship dynamics. It doesn’t cover:
- What happens if one founder stops contributing meaningfully
- How equity is earned over time (vesting)
- What triggers a forced buyout
- How the company is valued if a founder exits
- Non-compete obligations after departure
- IP assignment and ownership
- Decision-making when founders disagree on strategy
- What happens to equity if a founder dies or becomes incapacitated
These aren’t edge cases. Over the lifecycle of a startup, at least one of these scenarios is nearly certain to arise. Without explicit agreements, they default to Austrian company law—which is designed for general business situations, not for the specific dynamics of co-founded startups.
The co-founder agreement (sometimes called a Gesellschaftervereinbarung or Syndikatsvertrag) sits alongside the Gesellschaftsvertrag and addresses these gaps. It’s legally binding between the founders even though it’s not part of the formal company constitution filed with the Firmenbuch.
The Six Essential Clauses
Clause 1: Vesting Schedule
In Austria, unlike the US, vesting isn’t the default. When you found a GmbH, all shares are fully owned immediately. There’s no legal mechanism that automatically ties share ownership to continued contribution.
You need to create one contractually. A typical Austrian startup vesting arrangement:
- 4-year vesting period with 1-year cliff
- At the cliff, 25% of shares vest
- Monthly vesting thereafter for the remaining 75%
- If a founder leaves before the cliff, they forfeit all shares
- If a founder leaves after the cliff, they keep vested shares and forfeit unvested shares
- Forfeited shares are acquired by the company or remaining founders at nominal value
The mechanism in Austrian law is typically implemented through Aufgriffsrechte (forfeiture rights) in the Gesellschaftervereinbarung. The remaining founders have the right to acquire unvested shares at a predetermined price if a departure trigger occurs.
Have your lawyer draft this carefully. Austrian GmbH share transfers require Notariatsakt, which adds formality and cost to every transfer. The vesting mechanism should minimize the number of required notarial acts.
Clause 2: Good Leaver / Bad Leaver Provisions
Not all departures are the same. Austrian co-founder agreements should distinguish:
Good Leaver: Departure due to illness, family emergency, mutual agreement, or constructive circumstances. Good leavers typically keep vested shares at fair market value or a formula-based valuation.
Bad Leaver: Departure due to breach of agreement, termination for cause, competitive activity, or abandonment. Bad leavers typically forfeit all shares (or sell at nominal value).
The distinction matters legally and practically. Austrian courts will scrutinize Bad Leaver provisions for proportionality—excessively punitive terms may not be enforced. Work with a lawyer who understands Austrian case law on Gesellschaftervereinbarungen.
Clause 3: Valuation Mechanism
When a founder leaves and their shares need to be valued, you need an agreed method. Common Austrian approaches:
- Fixed formula: Revenue multiple, EBITDA multiple, or book value. Simple and predictable but may not reflect true value.
- Independent valuation: An agreed appraiser (Wirtschaftsprüfer) determines fair value. More accurate but expensive (€5,000-€15,000 per valuation).
- Pre-agreed multiple: The founders agree in advance on a valuation methodology to be applied at the time of departure.
Whatever method you choose, document it explicitly. Disputed valuations are the most expensive part of founder separations—they can cost more in legal fees than the shares are worth.
Clause 4: Decision-Making and Deadlock Resolution
50/50 equity splits create deadlock risk. When two founders disagree fundamentally—on strategy, on spending, on hiring—who decides?
Austrian GmbH law gives the Generalversammlung (shareholders’ meeting) decision-making authority by majority vote. But with 50/50 ownership, no majority exists. Options:
- Casting vote: One founder (typically the CEO or the founder with domain expertise) gets a casting vote in defined categories.
- Escalation procedure: Disagreements go through a defined escalation: discussion → mediation → arbitration → buyout trigger.
- Russian roulette clause: One founder names a price; the other must either buy or sell at that price. Dramatic but effective at resolving deadlocks.
My strong recommendation from watching startup conflicts at Startup Burgenland: avoid 50/50 splits. A 51/49 or 60/40 split with appropriate minority protections is cleaner than equal ownership with deadlock risk.
Clause 5: IP Assignment
All intellectual property created by founders for the company should be assigned to the company. This seems obvious but Austrian law doesn’t automatically assign IP created by a GmbH shareholder to the GmbH (unlike some employment situations where the employer has IP rights).
The agreement should specify:
- All IP related to the company’s business, created by any founder, is owned by the company
- Pre-existing IP brought by a founder is either assigned or licensed to the company on defined terms
- IP created after departure isn’t affected (unless it uses confidential company information)
This clause is especially important if you plan to seek investment. Investors will verify that the company owns its core IP—if it doesn’t, funding conversations stall.
Clause 6: Non-Compete and Non-Solicitation
Austrian law permits non-compete clauses between business partners, but they must be reasonable in scope, duration, and geography. Typical Austrian startup provisions:
- Non-compete: 1-2 years post-departure, limited to the company’s specific market segment, limited to Austria/DACH or the company’s operational geography.
- Non-solicitation: 1-2 years post-departure, covering the company’s employees and key clients.
Austrian courts will strike down non-compete provisions that are unreasonably broad. “You can’t work in tech for 5 years anywhere in Europe” won’t hold up. “You can’t directly compete in our specific market segment in the DACH region for 18 months” is reasonable.
The Equity Split Conversation
Before any legal documents, have the equity conversation honestly. Austrian startup culture sometimes avoids direct confrontation—founders agree to “equal” splits to avoid uncomfortable negotiation. This creates problems later when contributions prove unequal.
Factors that should influence the equity split:
- Who had the original idea (worth less than people think)
- Who has the relevant domain expertise
- Who is contributing capital
- Who will be working full-time versus part-time
- Who has the specific skills most critical to early success
- Who is taking the greater financial risk (leaving a secure job, for example)
Have this conversation before you see a lawyer. Come to the lawyer with an agreed split and the reasoning behind it. The lawyer implements your agreement—they shouldn’t be mediating your negotiation.
When I discuss Austrian business structures, I emphasize that the legal structure should serve the business relationship, not define it. The equity conversation and co-founder agreement are where the relationship is defined.
The Cost and Process
A proper co-founder agreement in Austria:
- Legal drafting: €3,000-€8,000 depending on complexity and lawyer
- Notariatsakt for GmbH founding: €1,000-€3,000 (required regardless)
- Combined Gesellschaftsvertrag + Gesellschaftervereinbarung: Can be drafted simultaneously, saving some cost
Timeline: 2-4 weeks from first draft to signed agreement, assuming founders are aligned on key terms.
Where to find the right lawyer: Look for lawyers specializing in Gesellschaftsrecht and Startup-Recht. The WKO maintains a list, and the Austrian startup community can provide referrals. Don’t use a general practice lawyer—co-founder agreements require specific expertise.
When to do this: Before founding the company. Negotiating a co-founder agreement after the GmbH is already registered is harder psychologically (people feel locked in) and legally (you’re modifying existing arrangements rather than creating new ones).
The investment of €3,000-€8,000 in a proper agreement is trivial compared to the cost of a co-founder dispute. Legal disputes between Austrian GmbH shareholders easily cost €30,000-€100,000 in legal fees—and that’s before counting the business damage from months or years of conflict.
The velocity principle applies to legal foundations too: invest the time upfront to move fast later without relationship friction dragging you down.
Takeaways
- The standard GmbH Gesellschaftsvertrag doesn’t address co-founder-specific scenarios—you need a separate Gesellschaftervereinbarung covering vesting, departure terms, valuation, deadlock resolution, IP, and non-compete.
- Implement vesting through Aufgriffsrechte in the agreement: 4-year schedule, 1-year cliff, with clear Good Leaver / Bad Leaver distinctions that Austrian courts will enforce.
- Avoid 50/50 equity splits—they create unresolvable deadlocks; use 51/49 or similar with minority protections instead.
- Have the equity conversation before engaging a lawyer, and negotiate the co-founder agreement before founding the GmbH—both are significantly harder to do retroactively.
- Budget €3,000-€8,000 for proper legal drafting; this is trivial compared to the €30,000-€100,000+ cost of a co-founder dispute without clear agreements.
