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A co-founder agreement is essential for startups, akin to a pre-nuptial agreement between partners. Its purpose is to prepare co-founders for potential worst-case scenarios, ensuring that they can remain friends even if things don't work out. In this video, attorney Feijo discusses the importance of having a co-founder agreement, key terms to consider, and the agreement's life cycle. He highlights that conflicts among co-founders are a leading cause of startup failure and emphasizes the need for clarity on roles, responsibilities, and decision-making processes. The co-founder agreement serves as a short-form shareholders agreement, accommodating modern fundraising methods like YC safe agreements.