All startup employees – including founders! –...

1:48 pm - Sun, Sep 13, 2009: 5 notes

All startup employees – including founders! – should vest over 4 years from their start date (with a one year “cliff”).

Rafer sez (rafer):
I fear that @cdixon and I work in different universes. Founder vesting is a terrible thing. While it can cost you a lot of economic value to lose a co-founder who owns their stock free and clear, founder vesting costs a lot more.

Having founder vesting already set in the VCs favor before you negotiate a round costs you a huge bargaining chip.

GBattle sez:

I understand both Chris and Scott’s arguments here. Chris is arguing for terms that guard against unfair distributions post a fallout among co-founders. Scott is arguing for an entrepreneur-friendly basis when going negotiating your first institutional round. Could there be a happy medium via using restricted stock, with an buyback rights that mirror “vesting” (buyback rights of 100%, 75%, 50%, and 25% for years 1-4 respectively) but those rights explode upon first institutional raise? Hence, if your company is successful enough to remain bootstrapped for a longer period of time of profitable organic growth, co-founders are properly penalized for early exit, but, if you do a Series A raise, the co-founders are aligned in collective bargaining rather than being in a divide-and-conquer situation. JIT (just-in-time) negotiations. I’m a neophyte in this arena, so I’ll defer to each of your opinions here.