Vesting is your friend

We’re used to seeing vesting in the context of stock option grants, but most founders cringe at the thought of having to vest their founder shares. After all, you founded the company. It’s yours, right? Why should you have to earn your shares back? From where I stand, whether you are the sole founder or have partners, vesting can be your friend.

One founder

As the sole founder, it’s your baby, so why vest? Simple. At some stage, either the 1st or 2nd financing round, the new investors will likely insist that you vest 1/2 of your stock over the next few years. So the clock only begins ticking after the money comes in. The earlier you start (since you know it’s going to happen), the earlier you’re fully vested. Nobodies going to ask you to vest again when you’ve already gone through one vesting period.

Co-Founders

Vesting is especially important when you have partners. Moststartups have issues between the co-founders. I have seen many situations where one partner left the business still holding a big chunk of stock. That’s not fair to anyone left at the company – founders, staff or investors. So, vesting protects you. If someone is not pulling their weight and delivering the goods, exit him and get back some of the shares.

So, my suggestion is from the 1st angel round or the 1st time you sign an employment agreement build in vesting on 1/2 of your shares, vesting over 4 years, fully vesting on the exit (some investors may fight that last point).