Team, Co-founders & Legal

How do I split equity and put a vesting schedule in place at incorporation?

A starting point

Split on the future, not the past, and vest everything. Equal or near-equal splits usually age better than one founder taking 90% for the idea, because execution over years matters more than who thought of it. Put every founder on a 4-year vest with a 1-year cliff from day one, including yourself, so a co-founder who leaves in month six doesn't walk with a third of the company. In India this is done via a founders' agreement plus share subscription and often a buyback right; in a Delaware C-corp it's restricted stock with an 83(b) election filed within 30 days.

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Hand-picked from around the web, each with a note on why it earns your time.

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📄 Article
✓ Link checked Free Beginner

Why we picked it YC's counterpoint is worth hearing precisely because it pushes back on being stingy: if this person is a real co-founder doing years of work ahead of you, generosity buys motivation across a four-year vest and prevents resentment. Read it against your traction story to decide honestly whether this is a true co-founder (lean generous) or an early employee wearing the title (grant, not founder equity). It is also the canonical source on why a one-year cliff and four-year vesting are non-negotiable.

How to Split Equity Among Co-Founders

From Y Combinator by Y Combinator 10 min read

  • Most of the work is still ahead, so under-paying a genuine co-founder in equity breeds resentment that vesting stretches over four years.
  • A cliff means someone who leaves inside year one walks away with nothing, protecting you from a bad early bet.
  • Use the generosity test as a gut check: if you would not give founder-level equity, be honest that this is an early hire, not a co-founder.
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📄 Article
✓ Link checked India Free Beginner

Why we picked it The single clearest explanation of the two documents Indian founders confuse: the founders' agreement (equity, vesting, roles, IP, departure, signed at or before incorporation) versus the shareholders' agreement (investor voting rights, drag/tag, reserved matters, signed at your raise). It nails the timing rule that trips people up: sign before shares are issued, because you cannot bolt vesting onto already-issued shares without every founder consenting. It is blunt that IP a founder built before incorporation belongs to that founder personally until a formal IP Assignment moves it to the company, which is exactly what breaks a diligence during your first term sheet.

Founders' Agreement: Definition, Key Clauses, and Template for Indian Startups

From EquityList by EquityList 15 min read

  • Founders' agreement governs the co-founder relationship; the shareholders' agreement layers in investor protections later, they are not the same document
  • Sign at or before incorporation and always before shares are issued, or vesting cannot be applied retroactively
  • Pre-incorporation IP stays with the individual founder until a formal IP Assignment Agreement transfers it to the company
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📄 Article
Free Beginner

Why we picked it Carta administers cap tables for tens of thousands of startups, so this is the canonical reference on how vesting actually mechanically works: the 1-year cliff, monthly vesting after it, and acceleration provisions. Their own data shows 92% of venture-backed companies put founders on vesting, which is the number to quote when a co-founder says 'we trust each other, we don't need this.' We could not fetch it live (Carta blocks automated requests with a 403), but the URL is the durable canonical page.

Vesting explained: schedules, cliffs, acceleration, and types

From Carta by Carta 12 min read

  • The 1-year cliff means zero equity vests until month 12, then 25% vests in one lump and the remainder vests monthly over the next 3 years.
  • Acceleration clauses (single vs double trigger) decide what happens to unvested shares on an acquisition, worth understanding before you sign a term sheet.
  • 92% of venture-backed startups put founders on vesting, so it is the default expectation, not an edge case you are opting into.
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