Founder Equity and Vesting Lawyer

Why Founder Equity Needs Structure

Co-founder disputes over equity are among the leading causes of early startup failure, often because splits were agreed informally without addressing what happens if a founder's role changes or a founder leaves. Documenting equity terms clearly from the outset reduces this risk substantially.

Determining the Split

Equity splits typically reflect each founder's role, time commitment, prior contributions such as intellectual property or capital, and expected ongoing involvement. There is no universal formula, but the split should be discussed explicitly and documented rather than assumed.

Standard Vesting Terms

A common standard is a four-year vesting schedule with a one-year cliff — no equity vests during the first year, after which a portion vests immediately, with the remainder vesting monthly or quarterly over the following three years. This structure protects the company if a founder departs early.

Handling Founder Departures

A well-drafted founder agreement addresses what happens to unvested — and sometimes vested — equity if a founder leaves voluntarily, is removed, or becomes unable to continue, reducing ambiguity and potential disputes at a difficult time.

Why Investors Require Vesting

Investors generally require founder vesting as a condition of financing, since it ensures that founders remain incentivized to continue building the company and that equity does not remain with a founder who leaves shortly after a round closes.

Revisiting Equity as the Company Grows

As roles evolve, companies sometimes need to address additional equity grants, re-vesting, or option pool expansions, all of which should be handled with the same documentation discipline as the original founder agreement.

Working With Anthony Girand, Esq.

Anthony Girand, Esq. is a JD/MBA and Maryland attorney whose practice includes immigration, tax controversy, federal litigation, startup law, and regulatory compliance. He brings a business-minded legal perspective to matters involving federal agencies, founders, professionals, companies, and individuals facing consequential legal decisions.

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