Hypothetical question
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?
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?
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 (at least in my experience), or should we give ourselves credit for the 6 months we've already been working on this?
We decided: 4-year vesting, 1-year cliff, 6 months credit for time served. Both filed 83(b) elections. Thanks for the help!