You started a company. You own shares. But if you take institutional capital — and in many cases if you bring on a co-founder — you don't actually own all of those shares yet. They vest over time. The founder vesting schedule governing that process is one of the most consequential documents you'll sign, and most founders read it for the first time under time pressure three weeks before closing a round.
What vesting is and why it exists
Vesting is a mechanism that prevents any single founder from taking their equity and walking away on day two. In a typical four-year vesting schedule with a one-year cliff, you earn 25% of your shares at month twelve, and the remaining 75% vests monthly over the following three years.
If you leave before the cliff, you get nothing. If you leave after the cliff but before four years, you keep what's vested and forfeit the rest. Investors want this structure because they're funding a team's continued work, not a paper ownership stake.
This is also why co-founder vesting matters as much as investor-imposed vesting. If your co-founder leaves at month eight with 50% of the equity, you have a structural problem — the cap table doesn't reflect the work being done, and future investors will price that risk in when they evaluate the company.
The cliff
The cliff is the minimum commitment before any equity vests. One year is standard. Some investor-imposed schedules use shorter cliffs for late-stage founding team members; some early-stage studio arrangements use milestone-based cliffs rather than time-based ones.
Understand the cliff before you agree to any structure. If you're entering an arrangement where the first year includes significant product validation and market testing, a time-based cliff may not reflect the actual risk and contribution accurately. Ask whether the cliff can be tied to milestones — specific product launches, first revenue, or customer count — rather than calendar time.
Acceleration
Acceleration clauses protect founders in acquisition scenarios. There are two types, and they work very differently.
Single-trigger acceleration says that if the company is acquired, a portion of your unvested shares vest immediately — regardless of whether the acquirer keeps you on. This is good for founders and problematic for acquirers, who want the founder to stay and therefore want vesting to continue through the acquisition as a retention mechanism.
Double-trigger acceleration requires two events: the acquisition plus either termination without cause or a material change in your role. This is the more common negotiated outcome because it's less deal-blocking for acquirers while still protecting founders from being acquired, immediately laid off, and left with forfeited equity.
What to negotiate in the founder vesting schedule
Three provisions matter most, and most founders don't negotiate any of them.
The cliff length. One year is standard, but it's not fixed. If you're a domain-expert founder with a strong thesis and a customer list, you have leverage to negotiate a shorter cliff — particularly at pre-seed where the investor is betting on you as much as the idea. Six months is achievable in some cases. Ask.
The vesting start date. Standard vesting starts from your employment or founder agreement date. If you've been working on the company for a year before formalizing the equity structure, you can negotiate for credit from an earlier date. This is sometimes called a retroactive vesting start or a "true-up." Founders get this more often than they expect when they ask for it before the term sheet is signed, not after.
Post-termination exercise windows. For option holders — usually employees, but sometimes founders in certain structures — the default exercise window after leaving the company is 90 days. That means if you leave and your options are in the money, you have 90 days to come up with the cash to exercise them or they expire worthless. Negotiate for longer: one to five years is achievable at early-stage companies. It rarely comes up, but when it does, the difference is between meaningful equity and forfeited equity.
The document that matters
Vesting is governed by your stock purchase agreement and your company's equity incentive plan. Read both before you sign. If there are provisions you don't understand, pay a startup-focused attorney to explain them — not a generalist, someone who does this work regularly.
The cost of a document review is $300–$500. The cost of not reviewing it is occasionally measured in millions, and more often measured in years of work that doesn't translate into the outcome you expected.
If you're evaluating a studio structure and want to understand how vesting works in that model before you commit, see our terms page for how Alder structures equity with operator founders.