Setting up cofounder vesting — what's standard?

My cofounder and I are splitting equity 50/50. Someone told us we need "vesting" to protect ourselves. What does that mean and what's typical?

Standard is 4-year vesting with 1-year cliff. Meaning: if your cofounder leaves after 6 months, they get nothing. After 1 year, they get 25%. Then they vest monthly for the remaining 3 years.

Protects both of you if one person bails early.

Important: vesting is about EARNING your equity over time, not about giving it away. If you both commit for 4 years, you both end up with your full 50%.

The cliff exists because someone who leaves at month 3 shouldn't own half your company forever.

PLEASE do this. My first startup: no vesting. Cofounder left after 8 months with 50% of the company. I built it alone for 2 years and he still owned half. Had to buy him out to raise money. Nightmare.

Should we both start vesting now, or should we give ourselves credit for the 6 months we've already been working on this?

Common to do "credit for time served" - so if you've been working 6 months already, you could start with 6 months vested. Or you could start fresh from incorporation. Up to you to negotiate.

Also look into 83(b) elections if you're a C-corp. File within 30 days of getting restricted stock or you'll pay way more taxes later.

also decide what happens on termination. "single trigger" means you keep vested shares if you leave. "double trigger" usually applies to acceleration (all shares vest immediately) if you're fired after acquisition. investors will have opinions on this later

We decided: 4-year vesting, 1-year cliff, 6 months credit for time served. Both filed 83(b) elections. Thanks for the help!