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All the advice that I've seen, from lawyers to VCs, suggests periodic vesting. You want to have shares vest in equal increments every day, week, or month. Any l
by markstansbury 16y ago
All the advice that I've seen, from lawyers to VCs, suggests periodic vesting. You want to have shares vest in equal increments every day, week, or month. Any longer than that and you're asking for trouble, like pre-vesting firings and the resulting bad-faith lawsuit.
The whole idea is to make vesting proportionate to work. So you don't want full vesting on day one. Your co-founder could quit on day two and leech the next few years of your hard work. (Plus any VC is going to make you revise that.) But you also don't want someone putting in three years of work and never vesting.
I would probably go with monthly to make it fair and easy.
- hajiss 16y agothanks for your answer Markstansbury, let say the co founder owns 35% of the company...in a typical start up, when do you allow them to vest the last portion? after a year, 2 years or when the company gets profitable?
- markstansbury 16y agoDo you mean the last 15% to bring to 50% ownership? Without knowing the specifics I would think the best idea is to vest incrementally every week or so. Also make sure you've got accelerated vesting upon sale or IPO. (That's a nice thing to give your employees too.) And consider a right to buy back shares at cost upon for-cause termination. I've never seen or heard of vesting upon profitability. I don't know if that's something that is done, but I would be hesitant to be on either side of that deal.