Founder Vesting

Definition

Founder vesting subjects founders’ own shares to a vesting schedule (typically four years with a one-year cliff), so a departing founder keeps only what has vested.

How it comes up in fundraising

Investors require it at the first priced round if not already in place; it protects everyone, including co-founders, from a departed founder holding a large dead stake.

Frequently asked questions

Why should founders accept vesting on their own company?

Because the biggest beneficiary is the remaining team: without it, a co-founder who quits in month six keeps their full stake while others build the value.

What is an 83(b) election?

A US tax filing made within 30 days of receiving restricted stock that locks in tax treatment at grant-time value; missing the window is a classic and expensive mistake.

Round Funded resources

Cite this term

Round Funded. "Founder Vesting." Startup Fundraising Glossary.

Stable URL, it will not change: https://www.roundfunded.com/en/glossary/founder-vesting

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