A vesting schedule sets when you earn your founder shares over time, and you can submit your startup on Round Funded to get matched with investors as you prepare to raise. A common arrangement runs for four years, with a one-year cliff and monthly vesting after the first anniversary.
What does a founder vesting schedule do?
A founder vesting schedule lays out how a founder earns shares over a period of time. If a founder stops providing service before all shares vest, the unvested portion is generally forfeited and returns to the company, as specified in the relevant agreements.
This arrangement can help protect a company when a founder leaves. Without vesting, a cofounder who departs early may keep all the equity granted at formation, even if the other founders remain responsible for building the business. Setting terms in advance gives the team a shared framework for handling unearned shares.
Vesting is not only about what happens if someone leaves. It also establishes expectations about the founders’ continued contributions and how ownership is earned. Your company’s documents should state each founder’s grant and the terms that apply to it.
How does a four-year vesting schedule work?
A common founder arrangement lasts four years and includes a one-year cliff. The cliff means that no shares vest during the first year. At the one-year anniversary, 25% of the grant vests. The rest is earned monthly over the following three years.
Here is the typical sequence:
- Before the first anniversary: No shares have vested under the schedule. If a founder leaves before reaching the cliff, all shares subject to that schedule are forfeited.
- At month 12: One quarter of the grant vests at once.
- After month 12: The remaining 75% vests in equal monthly portions over the next three years, at roughly 1/48 of the total grant each month.
- At the end of year four: All shares included in the grant have vested.
The schedule is a starting point, not a replacement for signed legal documents. The grant, the date vesting starts, the cliff date, and any negotiated provisions should be clear in the agreement. Founders should review the actual terms rather than relying on a general description of a common structure.
Which vesting terms should you discuss with investors?
Investors almost always require founders to be subject to vesting as a condition of a financing round. The arrangement can help address the risk that a founder leaves while retaining equity that has not been earned through continued service.
During a financing, investors may ask to reset or refresh a founder’s vesting. That does not necessarily mean a founder must begin from zero. You can discuss whether to recognize time already worked before the round and document any agreed credit in the terms.
Other provisions to review include:
- Double-trigger acceleration: Remaining shares may vest when an acquisition is followed by the founder’s termination within a specified period.
- Single-trigger acceleration: Vesting may accelerate upon an acquisition.
- Termination without cause: The agreement may provide for some vesting acceleration if the founder is removed without cause.
- Treatment of unvested shares: The documents should explain what happens to unvested equity when a founder’s service ends.
These provisions affect both ownership and what happens in significant company events. Their consequences depend on the agreement’s wording, so you should not assume that a label alone explains how a clause works. A startup attorney can help you evaluate the terms and record the arrangement properly.
What founder vesting mistakes should you avoid?
Leaving the discussion until a dispute or fundraising process. Founders can set terms at incorporation, with legal guidance, before a disagreement makes it harder to reach a decision.
Assuming earlier work will count. If a founder has already contributed substantial time, discuss and document any credit for that work. Do not assume it will be added automatically later.
Being vague about acceleration. Talk through acquisition and termination situations in advance. The agreement should specify which events trigger acceleration and how much equity is affected.
Relying on an informal agreement. Put each founder’s schedule, cliff date, and acceleration terms in signed documents. Keep company records consistent with those agreements.
Overlooking the 83(b) deadline. In the United States, an 83(b) election for restricted stock must be filed within 30 days of receiving it. Missing the deadline can be costly. Ask a legal or tax professional promptly whether the election applies to your situation and how to file it correctly.
How can you prepare for fundraising alongside founder vesting?
Clear equity terms can make it easier to explain your team’s arrangements during investor conversations. They do not replace the other work involved in preparing a raise. You still need to identify relevant investors, organize your materials, and keep track of outreach and next steps.
Round Funded helps founders find investors, send pitches, and track replies. Its searchable coverage includes 60,000+ active VCs, angels, family offices, and accelerators, with filters for stage, industry, geography, and check size. Investors are filtered to recent activity, with a check in roughly the last six months, and emails are verified. You can get matched with active investors as part of preparing your investor pipeline. Submit your startup on Round Funded to get matched with investors.
The product can draft personalized outreach emails and follow-ups for each investor. Outreach goes out from your own Gmail, so replies land in your inbox and the email thread belongs to you. A fundraising pipeline keeps investors, stages, and next steps together.
You can also build and share a Data Room with your deck, traction, team, and ask on one link. Building and sharing this room is free on every plan. Per-investor tracked links and engagement analytics, including views, deck opens, and meeting clicks, come with Round+. These fundraising tools can help organize your process, but they do not provide legal review of founder equity terms.
How Round Funded helps founders build an investor pipeline
- Submit your startup on Round Funded to get matched with investors.
- Search investors by stage, industry, geography, and check size to find profiles relevant to your fundraising plans.
- Use AI to draft personalized emails and follow-ups, then send outreach from your own Gmail.
- Track investors, fundraising stages, and next steps in the pipeline.
- Build and share a Data Room link with your deck, traction, team, and ask.
Frequently Asked Questions
What is a vesting schedule for founders?
It is an arrangement that sets when founders earn their shares. If a founder leaves before the full grant has vested, unvested shares are generally forfeited under the terms of the company’s agreements.
What is a typical founder vesting schedule?
A common arrangement lasts four years with a one-year cliff. No shares vest in the first year, 25% vest at the one-year mark, and the remaining 75% vest monthly over the next three years.
What happens if a founder leaves before the cliff?
Under the common schedule described here, no shares vest before the first anniversary. A founder who leaves before then forfeits the shares subject to that schedule, according to the applicable agreement.
Can investors ask founders to restart vesting?
Investors may ask for vesting to be reset or refreshed during financing. You can discuss credit for time already worked and make sure any agreed treatment is documented.
What is double-trigger acceleration?
It is a provision under which remaining shares may vest after both an acquisition and the founder’s termination within a specified period. The agreement should state the conditions and the amount of equity affected.
When is an 83(b) election due?
For restricted stock in the United States, the filing deadline is within 30 days of receiving the stock. Ask a legal or tax professional promptly whether the election applies and how to file it.