Equity Vesting Schedules for Startup Founders

It's an uncomfortable conversation to have with a co-founder you trust: what happens to their equity if they leave in year one? But skipping that conversation — and the vesting schedule that answers it — is one of the more common and expensive mistakes early-stage founders make.

Why vesting exists

Without vesting, a founder who leaves after two months owns the same percentage of the company as one who stays for the entire journey. That's a problem for the remaining founders, and it's a problem for investors, who generally won't fund a company where a meaningful chunk of equity is sitting with someone no longer contributing. Vesting ties equity ownership to continued involvement over time.

The standard structure

The common default is a four-year vesting schedule with a one-year "cliff" — meaning nothing vests until the founder has been with the company for a full year, at which point 25% vests all at once, with the remainder vesting monthly or quarterly over the following three years. If a founder leaves before the cliff, they walk away with nothing; if they leave partway through year three, they keep whatever has vested up to that point.

Where it gets complicated

A few details matter more than founders usually expect going in:

• Acceleration clauses. "Single-trigger" acceleration vests everything immediately on an acquisition; "double-trigger" requires both an acquisition and a termination without cause. Investors generally prefer double-trigger, since it doesn't let a founder cash out and leave the moment a deal closes.
• Repurchase rights. Some agreements let the company buy back unvested (and sometimes vested) shares from a departing founder at a set price — worth understanding before you sign, not after you leave.
• Credit for past work. If a founder has already been working on the company for a year before formal vesting starts, it's worth negotiating credit for that time rather than starting the clock from zero.

The takeaway

Vesting isn't a sign of distrust between co-founders — it's a standard structure that protects the company and makes it fundable. The time to negotiate the details is at formation, while everyone's still on good terms and thinking clearly about the what-ifs.