Founder Vesting Schedules: Cliffs, Good and Bad Leaver Terms and Acceleration
A vesting schedule sets out how a founder earns their shares over time, so that a founder who leaves early doesn’t walk away with all of them. Shares that have vested are the founder’s to keep. Shares that haven’t vested yet can be taken back by the company or the other shareholders if the founder leaves, usually for a nominal sum.
Founder vesting protects the founders who stay from the one who leaves. Without it, a co-founder who walks out in year one can keep a third of the company while the others do the work that makes those shares valuable. Investors ask for it for the…
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