What vesting schedule do startup founders usually get?

Question

Accepted Answer

The customary founder vesting schedule is four years with a one-year cliff: nothing vests for the first twelve months, a quarter of the shares vests on the first anniversary, and the rest vests in equal monthly installments over the following three years. Founders receive all of their shares at formation, but the unvested portion can be bought back by the company at the price the founder paid, usually par value, if the founder leaves before it vests. Why the cliff The cliff means a founder who leaves at month eight leaves with nothing, and one who leaves at month thirteen leaves with a quarter. It is the mechanism that protects the founders who stay from the one who did not, and it is the reason vesting is something to want rather than something imposed on you. Without it, a co-founder who departs early keeps a founder-sized stake and the remaining founders build the company for them. What investors expect A company that arrives at a seed or Series A round with fully vested founder stock is commonly asked to put it back on a schedule as a condition of the round. Agreeing to the customary terms at formation avoids that negotiation and, more to the point, avoids doing it under pressure with a term sheet on the table. Variations that are still customary Vesting credit for time already worked before formation, so a founder eighteen months in starts with a portion vested. A three-year schedule for a founder who has been at it for years. No cliff for founders who have worked together before and know it. Different schedules for different founders where one is joining later or part time. What is not customary is no vesting at all, and what is unusual enough to draw questions is a schedule with vesting weighted toward the end.

What vesting schedule do startup founders usually get?

Why the cliff

What investors expect

Variations that are still customary

Related questions