Meaning
A formal agreement establishes the value of contributions at the specific moment of incorporation. Every baseline settlement records the relative weight of ideas and labor before the venture begins to generate new data. It stops applying once a new round of valuation or a material change in the share structure occurs.
Temporal Boundary
Finality is reached before the first external transaction is recorded. Although the baseline settlement is written early, it remains the standard against which all future dilution is calculated. It marks the end of the negotiation phase and the beginning of the operational phase.
Verification Need
Signatures from all founding members confirm the validity of the numbers. A baseline settlement requires explicit consent to prevent one person from claiming a larger share of the initial value after the company grows. The existence of a signed document reduces the capacity required to manage internal disagreements.
Agreement Longevity
Long term stability in a venture depends on a clear starting point that remains accessible for years. The baseline settlement provides this stability by locking in the values that everyone accepted when the risk was highest. It does not account for later work but it ensures that the initial exchange of value is never reopened for debate.
This record is the foundation of the legal relationship between holders.
