How founder vesting works, why 4-year with a 1-year cliff is standard, acceleration clauses.
Founder vesting protects the company from a co-founder leaving early with a large equity stake. It also protects each co-founder from the same happening to them. The details — cliff, acceleration, reset — determine who wins if things go sideways.
Equity vests linearly over 4 years, with a 12-month cliff before any equity vests at all. If a founder leaves before month 12, they get nothing. Between months 12 and 48, equity vests monthly. This is the market default.
Without vesting, a co-founder who leaves after 6 months keeps 50% of the company forever. That kills the ability to raise (investors won't fund a company with a large absent shareholder) and demoralizes the founder who stays.
All (or a portion of) unvested shares vest immediately on acquisition. Founder-friendly but investor-hostile — acquirers usually want founders locked in for 1–2 years post-acquisition. Rarely granted in full.
Unvested shares accelerate only if two events happen: acquisition AND the founder is terminated without cause (or forced out) within 12 months of the acquisition. This is the standard and protects founders against post-acquisition purges.
Investors sometimes reset founder vesting at Series A — restart the 4-year clock even if the founder has been at the company for 3 years. This effectively confiscates 3 years of earned vesting. Push back hard: credit for time served is standard, full reset is not.
Standard: departing founder keeps vested shares and forfeits unvested. Some agreements include a repurchase option for the company to buy back vested shares at fair market value or the original price — read carefully.
Investor directory · Fundraising library · Articles A–Z · Company funding database