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Founder Stock Vesting Timeline
What is a Founder Stock Vesting Timeline in Startups?
A Founder Stock Vesting Timeline is a schedule that outlines when startup founders earn their shares of company stock over a set period. Instead of receiving all their shares upfront, founders gain ownership gradually, usually tied to their continued involvement with the company. This timeline helps ensure founders stay committed and contribute to the startup's growth.
Synonyms: Founder Stock Vesting Schedule, Founder Equity Vesting Timeline, Startup Founder Vesting Plan, Founder Share Vesting Timeline
Why a Founder Stock Vesting Timeline Matters
A vesting timeline protects the startup and its founders by preventing a founder from leaving early with a large portion of the company. It aligns incentives so founders earn their equity by staying active and helping the business succeed.
How the Vesting Timeline Typically Works
Most vesting schedules last four years with a one-year "cliff." This means no shares vest in the first year, but after that, a chunk vests all at once. After the cliff, shares vest monthly or quarterly until the full period ends.
Common Vesting Timeline Examples
A typical example is a 4-year vesting with a 1-year cliff. If a founder leaves before one year, they get no shares. After one year, 25% of shares vest, then the rest vest gradually over the next three years.
Frequently Asked Questions
- What happens if a founder leaves early? They usually forfeit unvested shares.
- Can the vesting timeline be changed? It can be adjusted but requires agreement from all parties.
- Why is there a one-year cliff? To ensure founders commit at least a year before earning any shares.
- Does vesting apply to all founders equally? Vesting terms can vary depending on agreements but often apply equally to all founders.
