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Saksham

ย โ€ขย 

Bebyondย โ€ขย 1y

Why Every Startup Needs a Founder Vesting Clause When launching a startup, it's crucial to protect your team and the companyโ€™s future. One key safeguard? The Founder Vesting Clause in your Term Sheet. What is Founder Vesting? Founder vesting ensures that equity is earned over time, protecting the company if a co-founder leaves prematurely. Without it, a departing founder could take a significant share of the company, leaving the remaining team with the burden. How Does it Work? - Vesting Schedule: Typically, equity vests over four years with a one-year cliff. This means if a founder leaves within the first year, they receive nothing. After the cliff, equity vests monthly or quarterly. - Accelerated Vesting: Some agreements include clauses for faster vesting if the company is acquired or a founder is terminated without cause. Why It Matters A Founder Vesting Clause aligns everyoneโ€™s interests, ensures stability, and protects the companyโ€™s equity. Itโ€™s a small step with a big impact, laying the groundwork for long-term success. Donโ€™t overlook this crucial element when drafting your Term Sheetโ€”it's essential for a thriving startup.

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