legal, equity, vestingI’m looking at a cofounders term agreement and don’t know what “% of each founder’s initial grant will be vested on the grant date” means and what is typical. Is the grant date the date this is signed or the period after the cliff or what? Also, what is the typical amount put here.
25% per year vesting with a 1 year cliff is standard. However, the vesting should be tailored to your specific situation.
Remember that as a confounder you will be severely diluted throughout the venture capital process. The longer the funding goes on and the more capital you get, the less your share will be. Unless you expect the company to exit for billions of dollars or the company is late stage, there is a high probability of you ending up with 10% or less of what you expect.
You need to read those lines in conjunction with the rest of the agreement.
If you do not understand the agreement
a) you need a simpler agreement at this stage
or
b) your startup is complex and you need to see a lawyer
The “grant date” in this case is likely in reference to the date on which the corresponding employee’s employment starts work for the company and begins their vesting period.
These shares would be basically be immediately vested and the next round of shares vesting after the cliff.
In most cases it would be recommended for this number to be 0% as all employees (even founders) should be subject to a cliff to protect the longevity of the company and value of the shares for the employees who stay and contribute to the company’s success for longer.
You don’t want a founder to walk off with any shares a week after finalizing documents because they changed they’re mind.
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