What is a founder vesting schedule?

What is a founder vesting schedule? It's the timetable for when each founder earns the split equity, and what happens if someone leaves. The split answers how much each founder owns. Vesting answers when that ownership is earned. Co-founders often settle the percentage and skip the timetable, because the percentage talk was awkward enough and everyone wants the meeting to end.

Have the second conversation in the same sitting. A number with no timetable feels finished until someone leaves. Then you're writing the rules on the worst day, with one person already out of the room.

About 1 in 3 founding teams split equally, according to a study of 1,476 founders across 511 ventures (Hellmann & Wasserman, "The First Deal"). An equal split can be the honest number when you reached it on purpose. The test for that is in should co-founders split equity 50/50. The timetable still needs an answer when the percentages match.

#How does a co-founder vesting schedule relate to the equity split?

A co-founder vesting schedule puts a timetable on the equity you just split. The two questions belong in one meeting because they describe the same shares.

Pie Divide is the process of record for that amount. You agree what counts, score each other privately, see one computed result with a category breakdown, and approve it together unanimously. The longer walk-through is how to split equity between co-founders, and the mechanics are on how it works.

1. Agree the weights first. Weights must total 100%, and every founder approves them before anyone is scored. On the free run, the weights are the standard weights, and they stay fixed. A full run on those weights is free. Custom weights and 12 industry templates come with the $49.99 one-time upgrade per project. No subscription. The details are on pricing.
2. Score in private. Each founder scores themselves and every co-founder. You can't see anyone else's answers. Peer assessment counts more than self-assessment: a self-score carries 20% in a three-founder team.
3. Read one stored result. The result is computed once and stored, with a category breakdown, so you can see what moved the number.
4. Approve together, or dispute. The split waits for unanimous approval. Approvals are timestamped. Anyone can dispute and run another round. The earlier result is kept. Finalizing is one-way.

Then take that record to your lawyer, who papers the vesting. Pie Divide doesn't set or track vesting, doesn't issue shares, and its record isn't a founder agreement. If a co-founder leaves, the stored split stays as approved.

Say one agency founder brings the clients and the other joins to deliver the work. The split may come out uneven, but both shares still need a timetable.

#What does a vesting cliff mean?

So what's the vesting cliff meaning? A vesting cliff is a date before which none of the equity on that schedule has vested. Cross the date, and a block of equity vests at once. Leave before it, and that block hasn't been earned.

A common convention is four years of vesting with a one-year cliff, as Clerky's founder handbook describes it. A quarter of the shares vest on the one-year anniversary of the start date. That anniversary is the cliff. After that, 1/48 of the original shares vest each month, so everything on that schedule has vested at four years. The same handbook also describes four-year straight-line vesting, monthly from the start.

When people say a typical or standard founder vesting schedule, that four-year, one-year-cliff pattern is usually what they mean. Your own dates and fractions are whatever your lawyer's documents say.

#What happens if a co-founder leaves before the cliff?

If a co-founder leaves before the cliff, the shares on that schedule haven't vested. In the cliff provision Clerky describes, service that ends before the cliff date means the founder doesn't vest in any of those shares, and the company has the option to repurchase them. Ask your lawyer whether your documents say the same thing.

Two painters leave the same crew to start a company together, both full time, and approve an equal split. Eight months later, one takes a wage job, and the stored result still says half and half. If their documents use the one-year cliff described above, month eight is before it, so those shares haven't vested. If they never asked the lawyer to write a schedule, the split is still half, and the timetable is an argument.

Leaving after a cliff can still leave part of the schedule unearned. The percentage you agreed doesn't, by itself, mean the rest has been earned.

#What should co-founders ask their lawyer about founder equity vesting?

Founder equity vesting is what your lawyer writes once the amount is approved. Bring the timestamped record, then ask the questions the split can't answer.

1. Where is the schedule written, and which shares does it cover? The split lives in your Pie Divide record. The timetable lives in the documents your lawyer drafts.
2. Is there a vesting cliff, and what date does it use? A cliff is a date someone has to name.
3. What happens if a co-founder leaves before that date? Ask what your documents say.
4. What happens if a co-founder leaves after the cliff, with time still left? Earned equity and equity still on the schedule are different once a schedule exists.
5. Does work from before the shares were issued change the date the schedule starts? The split records amounts. Ask your lawyer whether that date moves.
6. Do the documents treat every founder the same way? Ask while everyone is still in the room.

Agree the amount while everyone will still score it, and ask your lawyer to write the timetable before anyone has a reason to leave.

Run a free split

Pie Divide is not a law firm and does not provide legal, tax, or financial advice.