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Bebyond • 10m
Why Every Startup Needs a Founder Vesting Clause When launching a startup, it's crucial to protect your team and the company’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 everyone’s interests, ensures stability, and protects the company’s equity. It’s a small step with a big impact, laying the groundwork for long-term success. Don’t overlook this crucial element when drafting your Term Sheet—it's essential for a thriving startup.
Honorary Mentions - ... • 1y
You've got a killer startup idea, but building it needs a team. Your co-founder brings the marketing, while you do coding. But how do you ensure they're in for the long term? Here comes the Co-founder Vesting Schedule... What is a co-founder vesting
See MoreBuilding Nestsure • 22d
Have you all come across this wordcalled "Term-Sheet" Whenever you see someone raising funds or you yourself raising funds, but what actually is a Term Sheet ? 📄 Basically term sheet is a kind of agreement made between start-up and investors that
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The Institute of Chartered Accountants of India • 1m
What is an ESOP from a Company’s Perspective?🚀 An Employee Stock Ownership Plan (ESOP) is a tool companies use to attract, retain, and motivate talent by offering them ownership in the business. You’re not just giving away shares, you’re building
See MoreDrafting Airtight Ag... • 3m
"The Most Dangerous Clause in Term Sheets That Founders Ignore" Yes, it's the liquidation preference in your term sheet that can quietly screw you. It decides who gets paid first if your startup sells—or flops. Investors might snag 2x their money
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