Vesting

Earning your shares over time rather than owning them all immediately.

Example

A standard four-year vest with a one-year cliff: nothing at all until month 12, then 25% at once, then monthly.

Important

Founders should vest too. A co-founder who leaves in month three with 50% of the company permanently is the failure mode vesting exists to prevent, and it kills the next round.

Related terms

• Cliff — An initial period during which no equity vests at all. Leave before it and you get nothing.
• Equity — Ownership in the company, usually held as shares.
• Dead equity — A meaningful stake held by someone no longer contributing to the company.
• Founder equity split — How ownership is divided between the founders at the start.

Lessons that explain it

• Do you actually need a co-founder? — The honest case for and against. Solo founding is harder but not disqualifying, and a bad co-founder is much worse than none. (10 min)
• What to look for in a co-founder — Complementary skills matter less than commitment, values, communication and how someone behaves when things go badly. (12 min)
• The conversation to have before you commit — Fifteen questions that feel awkward now and prevent the disaster later. Have this before any equity is discussed. (15 min)
• The trial project — Two to four weeks of real work together before committing anything. The cheapest insurance in the whole company. (10 min)
• Splitting founder equity — Not based on who had the idea. Based on what each person brings from here — and it should be a real conversation, not a reflex 50/50. (12 min)
• Vesting and cliffs — Why founders should vest too, and why the one-year cliff protects everyone — including the person who leaves. (12 min)

All 176 terms in the Founder glossary