Venture Agreements In New Zealand: Key Terms For Startups And SMEs

If you’re building a new venture in New Zealand, you’ll probably spend most of your time on the exciting parts: validating your idea, finding customers, hiring your first key people, and getting a product out the door.

But once money, ownership, and decision-making enter the picture (whether that’s co-founders, investors, or a strategic partner), you’ll want a clear venture agreement in place.

A good venture agreement helps you avoid the “we’ll sort it out later” trap. It sets expectations early, protects relationships when things get stressful, and gives your business a solid legal foundation to grow from day one.

Below, we break down what venture agreements usually cover in NZ, when you’ll need one, and the key legal issues to watch for as your venture scales.

What Is A Venture Agreement (And When Do You Need One)?

A “venture agreement” is a broad term. In practice, it usually means a legal agreement that sets the rules for how your venture will be owned, funded, managed, and exited.

In NZ, venture agreements commonly show up in a few scenarios:

• Co-founders starting together and needing clarity on roles, ownership, and what happens if someone leaves.
• SMEs bringing in investors (friends and family, angel investors, or seed funding) and needing rules around shares, governance, and reporting.
• Joint ventures where two businesses collaborate on a project, product, or market entry.
• Strategic partnerships where one party contributes capital, IP, staff, or distribution channels and expects defined rights in return.

You’ll usually want a venture agreement before any of the following happens:

• anyone pays money into the business (or commits to pay later)
• shares are issued or promised
• someone starts building valuable IP (like code, brand assets, content, designs, or processes)
• you start pitching to investors using numbers, projections, or a business plan

If you wait until things get complicated, you’ll often end up negotiating under pressure. That’s when founders fall out, deals stall, and your venture loses momentum.

What Are The Most Common Types Of Venture Agreements In NZ?

There isn’t just one “standard” venture agreement. The right document depends on what your venture actually is (and where it’s heading).

Shareholders Agreement (For Ventures Using A Company)

If your venture is (or will be) a company, a Shareholders Agreement is one of the most common ways to set ground rules between founders and investors.

It usually sits alongside your company’s constitution. In many cases, it covers the practical “behind-the-scenes” arrangements between shareholders (like funding, exits, and dispute processes), while the constitution sets company rules that apply more generally.

Founders Agreement (For Early-Stage Setups)

Early-stage ventures often move fast, and a founders agreement can be a practical way to document key expectations while you’re still validating the business. It can cover equity splits, responsibilities, vesting, decision-making, and what happens if someone exits early.

As the venture grows and investment comes in, this often evolves into more formal company documents.

Joint Venture Agreement (For Two Businesses Working Together)

If your venture involves two separate businesses collaborating (rather than co-founders building a single company), you may need a joint venture agreement. This is especially common where each party wants to keep their existing business separate but share the upside (and risk) of a project.

In NZ, joint ventures can be set up in different ways, including:

• Contractual joint ventures (you stay separate entities but collaborate under a contract)
• Incorporated joint ventures (you create a new company to run the venture)

The “best” structure depends on tax, liability, control, and how long the collaboration will last. Because tax outcomes can vary significantly depending on the structure and the parties involved, it’s worth getting tailored legal and accounting advice before locking anything in.

Convertible Notes Or SAFEs (For Venture Funding)

If you’re raising funding early, you might use a convertible note. Some startups also explore SAFE-style instruments, although SAFEs are less standard in New Zealand than in some other markets and often need careful adaptation for NZ law and market expectations.

Either way, these tools can be helpful when it’s too early to lock in a valuation, but they need careful drafting to avoid misunderstandings later (especially around conversion mechanics, discount rates, valuation caps, and what happens on a sale or shutdown).

Term Sheets And Heads Of Agreement (For Negotiation Stage)

Before final documents are signed, it’s common to use a term sheet or Heads of Agreement. These documents can be partly binding and partly non-binding, which is where many ventures get caught out.

If you’re signing anything “pre-contract”, it’s worth making sure you know what obligations you’re actually agreeing to and what is still being negotiated.

What Should A Venture Agreement Cover?

A strong venture agreement isn’t just paperwork. It’s your playbook for making decisions under pressure.

While every venture is different, most agreements cover the topics below.

Ownership And Equity Split

This sounds obvious, but it’s one of the most common sources of disputes.

Your agreement should clearly set out:

• who owns what (and whether ownership changes over time)
• whether shares are fully issued now or issued later
• what happens if someone doesn’t deliver what they promised (time, money, IP, or sales)

For many startups, it’s also important to consider equity vesting. Vesting means someone earns their equity over time (often with a “cliff”), so the venture isn’t stuck with an inactive founder who still owns a big portion of the company.

This is often documented through a Share Vesting Agreement and aligned with the company’s share structure.

Roles, Contributions, And Founder Expectations

Not every founder contributes in the same way. One person might invest cash, another might build the product, and another might bring clients.

A venture agreement should spell out:

• each person’s role and responsibilities
• whether they’re expected to work full-time or part-time
• whether they’re paid salary/contractor fees, or only rewarded via equity
• what happens if someone can’t continue (health, burnout, competing commitments)

This is also where you can avoid “silent assumptions” like: “you’ll handle sales”, “you’ll do the admin”, or “you’ll fund the next six months”. If it matters, put it in writing.

Decision-Making And Control

A growing venture needs to make decisions quickly, but also fairly. Your agreement should cover:

• how day-to-day decisions are made
• which decisions require unanimous approval (for example, issuing new shares, taking on major debt, selling the business, or changing the business model)
• board appointment rights (if applicable)
• voting thresholds (simple majority, special majority, unanimous)

If you’re setting up (or updating) a company structure, a Company Constitution can also be important for governance and shareholder rights. It needs to align with your venture agreement so the rules don’t conflict.

Funding: Who Pays, When, And On What Terms?

Cashflow pressures can break an otherwise promising venture.

Your venture agreement should clarify:

• who is contributing funds (and whether it’s equity, a loan, or reimbursement)
• whether future contributions are required or optional
• what happens if someone can’t (or won’t) contribute when needed
• whether investors have pre-emptive rights (rights to participate in future capital raises)

This is particularly important for SMEs entering a venture with a larger partner, where the power imbalance can show up later if funding terms aren’t clear.

Intellectual Property (IP): Who Owns What Your Venture Builds?

If your venture creates IP (which most modern ventures do), you need to be crystal clear about ownership.

IP can include:

• software code and app functionality
• branding (logos, names, designs)
• marketing materials and content
• customer databases and systems
• product formulas, processes, and know-how

A common mistake is assuming the company automatically owns what founders create. That isn’t always true, especially if work is done before incorporation or created by a contractor.

Your venture agreement (and related contracts) should cover:

• who owns pre-existing IP brought into the venture
• how new IP is assigned to the venture/company
• what licences (if any) are being granted
• what happens to IP if the venture ends

Confidentiality And Non-Compete/Restraint Terms

Many ventures depend on sensitive information: pricing models, customer leads, product roadmaps, or supplier relationships.

A Non-Disclosure Agreement (or confidentiality terms inside your venture agreement) can help set expectations around what information must be kept confidential and how it can be used.

Restraint terms (like non-compete clauses) are trickier. In NZ, restraints are generally only enforceable to the extent they’re reasonable and necessary to protect a legitimate business interest (for example, confidential information, client relationships, or goodwill). Overly broad restraints may be unenforceable or may be narrowed by a court. This is exactly the kind of clause that needs tailored drafting for your specific venture and market.

Exit Rules: What Happens If Someone Leaves Or The Venture Is Sold?

This is the part people don’t want to talk about early. But it’s also the part that protects your venture when real life happens.

Your agreement should deal with scenarios like:

• a founder resigns or stops contributing
• a shareholder wants to sell their shares
• a shareholder dies, becomes insolvent, or separates from a spouse (which can affect asset ownership)
• you receive an offer to buy the business

Depending on the venture, you might include mechanisms like:

• good leaver / bad leaver clauses (different exit outcomes depending on why someone is leaving)
• right of first refusal (other shareholders get first chance to buy shares before they’re sold externally)
• drag-along and tag-along rights (to manage majority/minority sale situations)

Exit terms are also key if you’re aiming to scale and sell later. Buyers and investors usually want to see that ownership and transfer rules are well documented, not improvised.

What NZ Laws And Compliance Issues Should Your Venture Keep In Mind?

Venture agreements don’t exist in a vacuum. They sit inside New Zealand’s broader legal environment, and it’s important your venture is compliant as it grows.

Companies Act 1993 And Director Duties

If your venture is a company, directors have duties under the Companies Act 1993. This matters because founders often become directors without fully realising what comes with the role.

Director duties can include acting in good faith and in the best interests of the company, and being careful about trading while insolvent. Your venture agreement and governance documents should support good decision-making (and proper approvals) as the business grows.

Fair Trading Act 1986 And Consumer Guarantees Act 1993

If your venture sells products or services to customers, you’ll need to comply with consumer law. Two key laws are:

• Fair Trading Act 1986 (broadly covers misleading or deceptive conduct, advertising claims, pricing representations, and more)
• Consumer Guarantees Act 1993 (sets automatic guarantees for consumer purchases in many situations)

Even if your venture agreement is airtight, your customer-facing documents (like terms and conditions and refund policies) need to line up with NZ consumer law to avoid disputes and complaints.

Privacy Act 2020 (Especially If You’re A Digital Venture)

If your venture collects personal information (customer details, email lists, user data, employee information), the Privacy Act 2020 will usually apply.

In practice, that means you should understand:

• what personal information you collect and why
• how you store it and keep it secure
• who you share it with (for example, cloud providers and marketing platforms)
• how people can access or correct their information

Many ventures will need a Privacy Policy early, particularly if you’re building a website, app, or online store.

Employment Law If You’re Hiring (Or Planning To Soon)

As your venture grows, you might hire staff to move faster. That’s great for momentum, but employment issues can become expensive distractions if your legal foundations aren’t set up properly.

At a minimum, you’ll want an Employment Contract that matches how the person will actually work (hours, duties, probation/trial clauses if applicable, confidentiality, IP, termination process, and more).

It’s also worth ensuring your venture agreement doesn’t accidentally conflict with employment arrangements (for example, where a founder is both a shareholder and an employee).

Common Venture Agreement Mistakes (And How To Avoid Them)

Most venture disputes aren’t caused by bad intentions. They’re caused by unclear expectations.

Here are some common mistakes we see ventures make (and what to do instead).

1. Relying On Verbal Promises Or Messages

Handshake deals feel fast and friendly, until someone remembers the deal differently. Your venture agreement should be in writing, signed, and version-controlled so everyone is working off the same rules.

2. Using A Generic Template That Doesn’t Fit Your Venture

Templates often miss the tricky, venture-specific issues (like vesting, IP assignment, funding mechanics, and deadlock). They can also include clauses that don’t make sense in NZ or that aren’t enforceable in practice.

A venture agreement needs to reflect how your business actually operates, not how a generic business “should” operate.

3. Not Planning For Deadlock

If your venture has two equal owners, deadlock is a real risk. Deadlock provisions can include escalation steps, mediation, buy-sell mechanisms, or casting vote arrangements (depending on what’s appropriate).

Without a plan, deadlock can freeze your venture right when it needs momentum most.

4. Getting IP Ownership Wrong

If IP isn’t clearly owned by the venture/company, you can run into major issues later when raising investment or selling. Investors and buyers often do legal due diligence and will want to confirm the venture truly owns what it’s monetising.

5. Ignoring Exit Terms Because It Feels “Negative”

Exit clauses aren’t pessimistic. They’re practical.

If you build the exit plan while everyone is aligned, you’ll have a fair system if someone leaves later. That can preserve relationships and protect the venture’s continuity.

Key Takeaways

• A venture agreement is a practical way to set the rules for ownership, funding, control, and exits in your venture, especially when co-founders, investors, or business partners are involved.
• Common venture agreement structures in NZ include shareholders agreements, founders agreements, joint venture agreements, and early-stage funding documents like convertible notes (and, in some cases, SAFE-style instruments).
• Most venture agreements should address equity and vesting, roles and contributions, governance and decision-making, funding obligations, IP ownership, confidentiality, and exit mechanisms.
• Your venture agreement should align with your wider legal setup, including company governance under the Companies Act 1993 and compliance with key laws like the Fair Trading Act 1986, Consumer Guarantees Act 1993, and Privacy Act 2020.
• Common venture mistakes include relying on verbal promises, using generic templates, failing to plan for deadlock, and not documenting IP ownership properly.
• Getting the legal foundations right early helps your venture move faster, raise capital more confidently, and reduce the risk of disputes as you scale.

If you’d like help putting the right venture agreement in place for your business, you can reach us at 0800 002 184 or team@sprintlaw.co.nz for a free, no-obligations chat.