As a startup founder, it’s crucial to ensure that everyone in your team is aligned with the company goals and vision. For this reason, many startups have adopted vesting agreements, which are legal agreements that outline the terms under which an employee or founder earns stock or options in the company. A vesting agreement helps to incentivize employees to stay with the company long-term and to ensure that everyone is working towards a common goal.
If you’re a founder looking to create a startup vesting agreement, there are a few key things to keep in mind. First, you’ll need to determine the vesting schedule. Typically, vesting occurs over a period of time, with the employee or founder earning a percentage of their shares at regular intervals. For example, a common schedule is four years with a one-year cliff, meaning that the employee would earn 25% of their shares after one year and then would earn their remaining shares on a monthly or quarterly basis over the next three years.
Another important factor to consider is what happens if the employee or founder leaves the company before their shares fully vest. In this case, the vesting agreement should outline how the unvested shares will be handled. For example, they might be forfeited or repurchased by the company at a predetermined price.
There are a variety of startup vesting agreement templates available online that you can use as a starting point. However, it’s important to ensure that the template is tailored to your specific needs and that you have it reviewed by an attorney to ensure its legality.
When drafting a startup vesting agreement, it’s important to keep in mind the company’s goals and what you hope to achieve with the agreement. A well-crafted vesting agreement can help to attract and retain top talent and align everyone in the company towards a common goal. Take the time to create a vesting agreement that works for your company and helps to set it up for long-term success.