What is "vesting"?

Vesting is the process by which a stock grant, or a stock option grant, is allocated to the founder or employee over time.  For example, as a cofounder, after making decisions about the founder equity split, you are going to receive 500,000 founder shares.  These shares should almost never be granted outright, but should be vested over time.  A common vesting schedule looks like this:

  • One year cliff for the first 25%
  • The rest of the stock will vest over the next three years on a monthly basis

This means if you leave the startup before the year is out, you get no stock.  If you leave exactly at the one month mark, you will get 25% of your founder shares.  Thereafter, a proportionate amount of the remainder of your stock every month, until four years are up, by which time you will have received all of your founder shares.


Was this article helpful?
1 out of 1 found this helpful



Please sign in to leave a comment.

This website and all posts and content are intended for educational purposes only and for no other purposes including without limitation commercial purposes. Any other use must give proper attribution to the Martin Trust Center and is subject to certain legal rights contained in our license and terms of use. See full legal disclaimer HERE .
The content in this knowledgebase is subject to a non-exclusive license with share-alike restrictions and the terms of use of this site – which is available for your review HERE .

Have more questions?
Submit a request
Share it, if you like it.