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What is Founder Vesting?

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The mechanism that makes founder equity contingent on staying: shares are earned over time rather than owned outright from day one. Without vesting, a co-founder who quits in month two keeps every share they were issued - 'dead equity' owned by someone no longer building the company, which poisons morale and any future fundraise, because investors will not fund a cap table with dead equity on it. Vesting applies to everyone, including the CEO, and adding it late means renegotiating ownership under pressure at a fundraise, the worst possible moment. Put it in writing from day one, and confirm the mechanics for your jurisdiction with your own legal advice.

Benchmark. The default schedule is 4-year vesting with a 1-year cliff: nothing vests in year one, 25% vests at the cliff, and the remainder vests monthly or quarterly over the following three years. Double-trigger acceleration is the market norm; single-trigger puts acquirers off.

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