Why founders should vest too, and why the one-year cliff protects everyone — including the person who leaves.
Vesting means earning your shares over time rather than owning them all immediately. The standard is four years with a one-year cliff:
Unvested shares return to the company if you leave.
Because the single most damaging thing that can happen to a young company is a founder leaving early and keeping a large permanent stake.
It creates dead equity: a meaningful share held by someone contributing nothing. It demoralises everyone still working, and investors treat it as a serious problem because there is no clean way to fix it.
Vesting is also the thing that makes 'this isn't working' a survivable conversation rather than a catastrophe.
Two founders, 50/50, no vesting. Founder B leaves in month five — it was not working, no bad behaviour.
B keeps 50% for ever. Founder A now does all the work for half the company. Every future round dilutes A while B's absent 50% dilutes equally. Investors see 50% held by someone uninvolved and treat it as close to disqualifying. There is no mechanism to recover it; B has no obligation to give it back and may reasonably decline.
With standard vesting: B leaves in month five, before the cliff, and keeps nothing. A owns the company and can bring in a real partner.
That sounds harsh until you notice B is protected too. Without vesting, B would face enormous pressure to stay in something that was not working, or to hand back shares in an ugly negotiation. The cliff makes leaving clean.
First-time founders often think vesting is something investors impose, so they skip it until a round. By then it is a negotiation with someone who may have already disengaged.
The second mistake: believing 'we trust each other, we don't need it'. Vesting is not about distrust. It is about what happens if life changes — a job offer, an illness, a family move, or simply losing interest. None of those require anyone to behave badly.
The third: no acceleration provision. If the company is acquired, unvested founder shares should usually accelerate. Without it, an acquirer can effectively re-earn your equity.
Including yourself, including the one who had the idea. Especially then.
The standard, and universally understood. Deviating invites questions you do not need.
Unvested shares return to the company. Write it down before anyone has any reason to leave.
Single-trigger (on acquisition) or double-trigger (acquisition plus termination). Double is more common and more acceptable to acquirers.
Signed. A verbal understanding about vesting is worth nothing at exactly the moment it matters.
It protects the person who stays AND the person who leaves. If a co-founder resists it entirely, that is important information.
At incorporation, or immediately if you have already incorporated without it. It is never too late and it only gets harder.
There is no situation where founder equity should be unvested. Sole founders sometimes skip it, and even then investors will usually impose it at the first round.
Apply this to your own startup in My Full Journey (free account).