Vesting restrictions on shares held by the founders
Founders should put vesting restrictions on their shares. “Vesting” means that you need to “earn” your shares before you are allowed to keep them if you leave the company. Investors will insist that the founders’ shares are subject to vesting, because it is important that the team they are investing in is motivated to stay with, and build value in, the company.
As founders, you should want vesting restrictions imposed on each other’s shares as well. Otherwise, one founder could just leave the company and keep his or her shares while the other founders are the ones working hard to build value in the business.
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- The right time to incorporate
- Determining the right type of entity to create
- Where to incorporate
- Defining “qualified to do business” and where to be qualified
- Who makes decisions for the company?
- How startups compensate employees
- Foreign employees and their need for a visa
- Who owns your IP
- Licensing IP from a university or hospital
- Retaining a license to your IP
- Non-competes with former employers
- Reserving shares under the company’s option plan
- Accelerating vesting on a sale or termination
- Vesting terms that make sense
- Tax implications related to shares that vest
- Difference between consultants and employees
- How startups compensate employees
- Foreign employees and their need for a visa
- Unpaid interns
- Non-competes with former employers
- Reserving shares under the company’s option plan
- Agreements with employees
- Hiring a team before securing funding
- Vesting restrictions on shares held by the founders
- Accelerating vesting on a sale or termination
- Vesting terms that make sense
- Tax implications related to shares that vest
- Difference between options and restricted stock
- Tax differences between ISOs and NSOs
- Granting options vs. issuing restricted stock
- Advisory board setup and compensation
- Reserving shares under the company's option plan
