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Founder Agreements – Vesting, Vesting and more Vesting

High Contrast

Some time ago Sim Simeonov asked me to write a guest post on the subject of founder agreements.  Time based vesting is often a good idea. 

6-year vesting

Venture Hacks

Every team member of AngelList is on a 6-year vesting schedule. Including the founders. Everyone asks whether they get more equity to make up for the longer vesting schedule. If you’re interested in a 6-year vesting schedule, AngelList is hiring engineers and designers. Does that mean I get more equity?

Equity basics: vesting, cliffs, acceleration, and exits

The Startup Toolkit

false As a cheatsheet, the “normal” equity structure is: Founder terms: 4 year vesting, 1 year cliff, for everyone, including you.

The best vesting schedule

High Contrast

There is no such thing as the best or optimal vesting schedule in a startup. That doesn’t mean current vesting schedules are really good but it does mean that many of the so-called best alternatives are not much better. Did the vesting schedule in a startup help or hurt returns for various types of equity holders?

How to Protect Your Startup Founder’s Shares

Startup Professionals Musings

These shares are allocated and committed, but not really issued and owned (vested) until later. Vesting with no cliff. Marty Zwilling.

Founder’s Stock Is Gold, If You Know The Rules

Startup Professionals Musings

These shares are allocated and committed, but not really issued and owned (vested) until later. Vesting with no cliff. Marty Zwilling.

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When Founders Leave

StartupCFO

They say that the co-founder relationship is like a marriage. The Founder Pre-Nup. Founders are initially resistant to this.

Founder’s Stock Is Gold, If You Know The Rules

Gust

These shares are allocated and committed, but not really issued and owned (vested) until later. Vesting with no cliff.

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How to Divide Founder Equity: 4 Criteria to Discuss

View from Seed

like to say that “there are only co-founders” — it’s extraordinarily rare for a successful business to have just a sole founder.

The Co-Founder Mythology

Both Sides of the Table

covered what I call “the co-founder mythology.&# So embedded is this conventional wisdom in Silicon Valley that it feels like heresy to even question it. It’s Either you’re not technical and you think you need a technical co-founder or vice-versa. Hire your co-founder. Vested over 4 years. Even 40%.

Punch & Pie: How Should Co-Founders Divide Equity?

Agile VC

I like to say that “there are only co-founders” — it’s extraordinarily rare for a successful business to have just a sole founder.

Optimum Share and Option Vesting

Angel Blog

I believe vesting is the most important element of corporate structure. Vesting has incredibly powerful effects on the group psychology, culture and corporate performance. have seen many companies literally fail due to flaws in their vesting. All vesting for senior employees accelerates on a sale of the Company.

How to Find a Co-Founder

How to Change the World

After the fact, people may recognize one founder as the innovator, but it takes a team to make a new venture work. Do not rush.

Founder Liquidity

K9 Ventures

Let’s say you’re the founder (I use a solo-founder in my example to keep things simple, but this could just as well apply to a founding team) of a startup called Blood, Sweat and Tears, Inc. The objective is really to be able to get some risk off the table for the founders and not leave all their eggs in one basket. aka BST).

Founder Liquidity

K9 Ventures

Let’s say you’re the founder (I use a solo-founder in my example to keep things simple, but this could just as well apply to a founding team) of a startup called Blood, Sweat and Tears, Inc. The objective is really to be able to get some risk off the table for the founders and not leave all their eggs in one basket. aka BST).

Founder's Dilemmas: Equity Splits

Startup Lessons Learned

On average, the founders who keep the most control over their company make the least amount of money. Uncertainties abound. recommended readin

Founder's Dilemmas: Equity Splits

www.startuplessonslearned.com

Founders Dilemmas: Equity Splits. On average, the founders who keep the most control over their company make the least amount of money.

Checklist For Launching A Startup

Ask The VC

It’s summarized at If I Launched A Startup   and includes stuff on incorporation, founders stock, vesting, NDAs, and some other useful things. Company Creation incorporation launch nda vestingI ran across a dynamite set of posts for anyone launching a startup. If you are launching a startup, go check it out.

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What is an effective “pre-incorporation-agreement” between possible founders of a startup?

Gust

Then sit down with your co-founders and divvy up the equity based on the contributions you all believe each of you will make…providing for reverse vesting, a large option pool, and a clear decision-making structure. Pivotal Moments equity Founder equity founder relationships founders incorporation agreement startups

The Importance of Vesting Schedules – Part 2

Scott Edward Walker

“I didn’t even know what a vesting schedule was… [and] that mistake probably cost me billions of dollars.” www.youtube.com/watch?v=-R01YcgJ3Yw.

5 Mistakes Every Startup Founder SHOULD Make

OnStartups

So here''s an initial list of mistakes that you SHOULD make as a startup founder. It''s natural to want to keep your cards close to your vest.

Avoid the 50/50 co-founder model - here's why

joel.is

I recently received an email asking some advice about co-founders, specifically about whether a 50/50 ownership split makes sense for a startup.

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.

How To Allocate Founder and Employee Equity

A VC : Venture Capital and Technology

Before factoring in dilution from investors, the founders should end up with about 50% of the company, total. It never makes sense to give anyone equity without vesting. Nobody who is not working full time counts as a founder. Ideas are pretty much worthless. And I second with emphasis the focus on fairness.

8 Ways To Maximize The Value Of Your Startup Stock

Startup Professionals Musings

This is the purpose of a vesting schedule, which issues allocated stock over time. Key founder vesting should have no cliff.

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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.

Finance Fridays: Getting Started – Allocating Equity and Founder’s Investment

Feld Thoughts

Finance Friday’s gets off the ground with today’s post by introducing you to an imaginary startup, the entrepreneurs that we’ll being following throughout the series, and their first challenges: splitting up the founders’ equity and addressing the case where one of the founders provides the initial seed capital for the business.

How to Divide Equity to Startup Founders, Advisors, and Employees

thinkspace.com

How to Divide Equity to Startup Founders, Advisors, and Employees. Equity for Founders. How long should people vest – four years?

Legal Checklist for Startups

Scott Edward Walker

Set-up vesting schedules for the founders (see post here ) and file 83(b) elections with the IRS (see #3 here ). 4. 

What Founders Need to Know About Equity Grants

Early Growth Financial Services

Employees who feel vested and part of the team are more committed to their companies. That said, it’s important to attract the right talent.

Startup Founder Agreements

High Contrast

Simeon, can you tell us how you structure ownership and control so you can fire your co-founders if necessary? The first part will dispel some myths, address the lifecycle of founder agreements and the key compensation and control parameters in them. Let’s start by dispelling some myths: There is a standard founder agreement.

10 Dilemmas Every Startup Founder Must Deal With

Startup Professionals Musings

Should you start a company solo or find co-Founders to help you? The co-Founder relationship dilemma. The Founder succession dilemma.

How to pick a co-founder

venturehacks.com

Picking a co-founder is your most important decision. One founder companies can work, against the odds (hello, Mark Zuckerberg).

Success = Co-founder vs. Failure = "Early Employee"

Allen's Blog

Have you ever noticed, that, after the fact, successful companies have many "co-founders", while failed startups have only "early employees". Surprisingly to many people, and unlike seemingly similar terms, such as "Chairman", "CEO", "Board Member", "VP Marketing", the term "Founder" has no legal significance. 

Founders: Eyes wide open

Information Arbitrage

Early stage VCs and founders are bound together by a spiritual relationship around the founders’ mission. However, if you do decide to take venture money, there are few things I’d recommend founders do to get the most out of the relationship: Trust your new partners. Raising money is a hard and sometimes scary thing.

How many co-founders should you have?

StartupCFO

While I was checking out their website to learn more about his company, I noticed that Austin is one of eleven co-founders.

What is the best way to divide up ownership in a startup?

Grasshopper Herder

When considering this issue, many people will focus on incentivizing the founders as well as issues of equality and equity. Finding Co-Founders Investment co-founders equity vesting schedulewould recommend a deep understanding how roles and responsibilities will be divided prior to discussing the equity split.

The “I-just-got-bought-by-a-big-company” survival guide

Scott Weiss

So here was the big dilemma: I had signed up for 24 months of re-vesting my founder’s shares that wouldn’t begin until the deal was closed and it already seemed like a paint-drying eternity. I was pretty sure that I wasn’t cut out for a big company but I just couldn’t spend the next two years watching the clock or I’d spiral into insanity.

Punch & Pie: How Should Co-Founders Divide Equity?

Agile VC

I like to say that “there are only co-founders” — it’s extraordinarily rare for a successful business to have just a sole founder.

4 Deadly Legal Mistakes That Startups Make

Scott Edward Walker

Vesting Restrictions.  The first deadly mistake relates to vesting restrictions.  Any IP created or acquired by a founder (e.g.,