Definition
What is vesting?
Vesting means earning your shares over time instead of owning all of them on day one. If you leave before your shares have fully vested, the company can usually buy back the unvested portion.
Founder shares are normally issued upfront but subject to a vesting schedule, so a cofounder who leaves early doesn't keep a stake that the remaining team has to work for. Investors expect founder vesting and often ask for it to be put in place before they invest.
The most common schedule for startups is four years with a one-year cliff, vesting monthly after the cliff. Some teams give credit for time already worked before incorporation.
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Common questions
Do founders need vesting?
Yes, in almost every case. It protects each founder if another leaves early, and investors usually require it before they invest.
What is a typical vesting schedule?
Four years with a one-year cliff, vesting monthly after the cliff.
Read the guide: How to split equity with a cofounder
General information, not legal, tax or investment advice.