How do I split equity and put a vesting schedule in place at incorporation?
The short answer
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.
Go deeper, your way
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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.
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 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
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.
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.
