Article · 9 min read

Founder vesting: what early-stage founders need to know

HSBC Innovation Banking Free Beginner

This is the plain-English explainer that says the quiet part out loud: the 4-year schedule with a 1-year cliff exists so a co-founder who walks in month three walks away with nothing, and their unvested shares get reallocated to whoever keeps building. It names the exact standard (12-month cliff, then monthly vesting) without drowning you in legalese, and frames vesting as protection for the team, not a signal of distrust.

  • The industry standard is 4-year vesting with a 1-year cliff: cross the cliff and 25% vests at once, then the rest drips monthly.
  • A founder who leaves before the cliff forfeits everything, so their shares return to the company instead of dead-weighting your cap table.
  • Investors expect to see founder vesting in place; not having it is a red flag at your first raise, so set it before you need to.
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The question it answers

  1. What does co-founder vesting actually mean, and why do I need it even if we trust each other?

Read with it

  1. The India-specific piece that tells you where the split actually gets signed. It separates the founders' agreement (equity,... Treelife Article · 10 min read Founder Vesting in a Shareholders' Agreement: What Startup Founders Must Know Treelife
  2. Carta administers cap tables for tens of thousands of startups, so this is the canonical reference on how vesting actually... Carta Article · 12 min read Vesting explained: schedules, cliffs, acceleration, and types Carta
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