Need help deciding on equity / vesting schedule for my startup
2 comments
Part of this depends on what your plan is with the company. If you intend to seek VC funding, vesting is going to be renegotiated. Will your co-founder even agree to that?
I am concerned because vesting immediately is way outside of the norm. What stops him from walking off the next day?
A one-year vesting schedule is not advisable either. Are you really going to have a liquidity event in a year? If that's the concern, have acceleration terms to deal with that. I agree with rogerkirkness that 4 year vesting is the right way to go. I don't think 5 is necessary, though you can do that.
You can avoid the "boss-employee" vibe by having the same vesting schedule for yourself.
Trust me - I see a lot of bad co-founder situations. You don't want to have a co-founder with tons of equity who isn't working out.
I am concerned because vesting immediately is way outside of the norm. What stops him from walking off the next day?
A one-year vesting schedule is not advisable either. Are you really going to have a liquidity event in a year? If that's the concern, have acceleration terms to deal with that. I agree with rogerkirkness that 4 year vesting is the right way to go. I don't think 5 is necessary, though you can do that.
You can avoid the "boss-employee" vibe by having the same vesting schedule for yourself.
Trust me - I see a lot of bad co-founder situations. You don't want to have a co-founder with tons of equity who isn't working out.
The standard vesting schedule for founders if you decide to fundraise is 4-5 years with a cliff at one year.
That said, you typically start the vesting at the start date of service to the company, so you would credit yourself with 6-7 months of vesting and your co-founder with 0-1 months.
The general assumption at this point is that it takes 10-15 years to reach a meaningful exit, so a split that unequal six months in is uncommon because it's a small percentage either way of the totality of the founder journey.
Split is up to you but I'd recommend four year vesting for both of you, one year cliff for both, starting on service start date.
That said, you typically start the vesting at the start date of service to the company, so you would credit yourself with 6-7 months of vesting and your co-founder with 0-1 months.
The general assumption at this point is that it takes 10-15 years to reach a meaningful exit, so a split that unequal six months in is uncommon because it's a small percentage either way of the totality of the founder journey.
Split is up to you but I'd recommend four year vesting for both of you, one year cliff for both, starting on service start date.
Background info about the company: We have around 15 users so far, some logged on to the app, tried a few things, and logged off and most likely did not return. (Acquired mostly through cold outreach, no ads or proper campaign is set-up yet) We have zero MRR. I have built an MVP and am working on improving it
Some of the tools i built are not necessarily as important to the users as I imagined, and I am working re-working those into more useful tools (most of which I will be handling) after acquiring feedback.
We agreed on a 37.5 / 62.5 split. I have got 62.5.
My question is how should a cliff / vesting schedule look like for the org? My co-founder wants it to vest immediately, I'm not sure if this is the right decision but i don't want him to feel like he is being used for work or give off an employee - boss vibe. But I want to be careful and safe with the decisions I make.
I was thinking something along the lines of a 3-6 month cliff with a 1 year vesting schedule, and if we sell during that time I will be fair and give some more equity to account for in general work being done (I am not sure how much more). My co-founder suggests that it vests immediately and if he leaves then the equity goes back to me.
Bottom line, I don't want to be irrational when splitting equity and vesting in the company, and I want to make it fair for both of us so I need some help deciding a vesting / cliff schedule for myself and my co-founder. Right now I haven't set up any cliff / vesting schedule for either my own equity or his.