4 ms·
If the founders have been working on the company for awhile I'll usually agree to a shorter vesting schedule. That said, one of my favorite things in the world
by sama 13y ago
If the founders have been working on the company for awhile I'll usually agree to a shorter vesting schedule. That said, one of my favorite things in the world is when a founder proposes 6-year vesting for a company they've already been working on for awhile to set the right standard for everyone else.
- mindcrime 13y agoI didn't realize anybody did 6 year vesting! It's weird, though... I get what you're saying about setting the standard and keeping things consistent, but founders are a bit of a special case, in that - in at least some cases - they've already put in a big chunk of their time. I guess what would make sense, to my mind, would be a standard N year vesting (where N is 3, 4, 6, whatever) but give the founders credit for "time served" so to speak. In any case, thanks for sharing this, and for promoting the "founder friendly" approach. It seems right to me, since you want the founders to be taken care of, so they remain motivated to work as hard as they can on building the best possible company. I feel like it's short-sighted of investors to try to squeeze the founders too hard. Worst case, you wind up with founders who have no real incentive to bust their ass building the company!
- jacquesm 13y agoOne way to hit the sweet spot is to figure out how much the founders have put in in 'sweat', their time at market rate and have that chunk of the stock be free from any vesting clauses.
- Domenic_S 13y agoI agree that a chunk free from vesting makes sense, but translating sweat to dollars is contentious. For a couple reasons I can think of: 1) Why should the investor retroactively pay your made-up salary for the privilege of investing? Valuation has something to do with the assets or future assets of the company; a salary is a liability. 2) How much is that sweat equity really worth if the company turns into the next salesforce/facebook/etc? Many millions upon millions. Any typical estimate ("let's call my salary $100k over the last 2 years....") is going to fall so short that it's useless.
- prewett 13y agoFor #1: investing in the company I founded is definitely a privilege. The investor obviously thinks that my company would provide a better return than investing elsewhere. High rates of return are not easy to find, hence it's a privilege to invest in the company I founded, in the vision I am creating. Disclaimer: I am not actually founding a company, nor have I in the past, nor am I likely to build a company that requires VC investment, but this is what my attitude would be if I were.
- Domenic_S 13y ago> The investor obviously thinks that my company would provide a better return than investing elsewhere. And you obviously think taking the VC's money is more valuable than taking a bank loan/cash advance/going with another VC. Both sides have something to gain. Only thing is, if you're looking for VC money you need the money. The VC doesn't need to invest in you.
- johnrob 13y agoWouldn't you need a valuation to achieve that? Most seed rounds are convertible debt.
- tyang 13y agoAngelList does 6 year vesting with its own employees. I convinced a startup I work with to do 6 year vesting, including my adviser shares (though I had some vest upfront for all the work I put in). More startups should do this, including with adviser shares.