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Edward Palomo
10,250 PointsVesting question
Hi, I have a question on vesting. Say one founder put in cash upon founding a company then he did not qualify with our vesting agreement, the company will give back his cash right? xD
3 Answers
Ryan Carson
23,287 PointsEdward, can you please clarify the question? Why did he not qualify for vesting? Was it because he left the company before he vested? Normally vesting means that you get xx number of share options, that vest over time. Usually there is a four-year vesting period with a one-year cliff. This means you get 25% of the options after 12 months and then they vest 1/36 every month until you own all the share options. If you leave before your vesting is complete, you can only exercise (or buy) the shares that have vested. This is obviously to encourage option holders to stick around.
Normally vesting is not attached to shares when someone invests money. The investor's shares are immediately owned 100% and they don't have to wait for vesting. All of this will be determined by the Term Sheet. I would recommend reading Brad Feld's book: Venture Deals: Be Smarter Than Your Lawyer and Venture Capitalist
James Barnett
39,199 PointsI'd suggest you consult a lawyer on this and any other questions that involve legal contracts and/or a significant amount of money.
Alexander Sobieski
6,555 PointsYikes... that sounds like it's going to get fun in a hot second.