Ask HN: Vesting Schedule on Founders Shares?

https://news.ycombinator.com/item?id=497574

by BenS • 17 years ago

4 7 17 years ago

news.ycombinator.com

Hi, I was wondering if anyone knows what vesting schedule is 'typical' for founders shares. I know that for employee options, 4 year vesting schedule with a 1 year cliff is standard. Is it the same for founders shares?

Mistone3• 17 years ago

based on feedback I read in Founders at Work - I believe Jessica and many others suggest setting it at 2 years. thats what we use at our startup.

pg2• 17 years ago

Jessica suggests 4 years.

Mistone3• 17 years ago

thanks for the correction, I actually want to revise our founders agreement to a 4 years vesting schedule, espec with lower then foretasted growth in today's economy, two years seems so short.

pg2• 17 years ago

yes

thorax• 17 years ago

4 years vest with 1 year cliff for 25%, quarterly or monthly vesting after that first year. Be careful, though, when you grant these. If you don't structure things right (assuming I understand correctly), there could be tax consequences when they vest.

BenS• 17 years ago

Thanks for the feedback. I also pinged another entrepreneur who had offered this opinion:

Often 1/4 to 1/2 is vested immediately. Typically you will have accelerated vesting in the event of an acquisition. This can come in the form of a single or double trigger (first trigger is when the acquisition happens and second trigger is if you are fired or quit from the acquiring company).

Assuming your non-immediately vested shares have a one year cliff (no vesting until 1 year worked) and 4 year vesting (month by month after the first year), you should consider not having any vesting in the event of an acquisition.

Acquisition probably won't happen until you've been going for a couple years at least, and much of your shares were vested immediately so fractional vesting of the balance won't make a big difference to you. On the other hand the fractional vesting might make a big difference to an executive you hire between founding and acquisition and you can assume that a big time hire will negotiate to match your accelerated vesting provision (might really erode the value to the acquirer to not have that exec with golden handcuffs).

If you have FF shares, those should represent 1/4 to 1/10th of your total holding and you should make sure that these shares are all vested immediately at founding.

Ask HN: Vesting Schedule on Founders Shares?

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