Both Sides of the Table

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First Round Funding Terms and Founder Vesting

Both Sides of the Table

The meme was kicked off by Chris Dixon with this post saying that term sheets need to be simplified and align investor / founder interests. This is part of my ongoing series “Pitching a VC“ There’s a great meme developing this morning on the need to simplify funding terms and documents.

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First Round Funding Terms and Founder Vesting

Both Sides of the Table

One very important item from Chris’s original post that wasn’t picked up by Fred or Brad is founder vesting. Chris writes that early-stage deals should have: Founder vesting w/ acceleration on change of control. I’m protected against your walking (as are your co-founders protecting each other).

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The Co-Founder Mythology

Both Sides of the Table

If you do decide to go down the 50/50 route, please at least consider: Make sure you have founder vesting for both of you. It is not uncommon to see startup founders walk before raising capital and take large pieces of equity with no vesting. We’re all friends when things are moving up and to the right.

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Most Common Early Start-up Mistakes

Both Sides of the Table

Founder vesting. Yesterday I wrote a blog posting on founder vesting (see here ). You should implement restricted stock with vesting at the earliest stages in your company -even before the VC’s ask. Founder vesting is an insurance policy for all team members involved.