Post by @thefounderadvisor

If you’re an aspiring founder, you need to understand what vesting or you can risk losing all your ownership in your company. Let’s say I’m a venture capitalist and I give you $10m to buy half your company. The company’s valuation is $20M and you own the other half of the company so you're technically worth $10m on paper (Good job!). But, as a term of my investment, I am going to require your equity ownership vest - wtf did that mean!? A vesting schedule as it’s called means that you get your equity ownership allocated to you over a period of time. The standard vesting is that you vest equally each month over 48 months. So if you were granted 48 shares, you would get 1 share a month 48 months. If you quit or get fired halfway through that vesting period, you would only get half of those shares. So why do investors make founders vest in their own companies? And, also why do founders and CEOs make employees vest? Vesting schedules ensure that people stick around to build the business. Think about it this way - if you or your employees own all your equity on day 1, you have little incentive to stay and build the company, you’d just leave. Now here’s where it gets gnarly. Many Founders get fired soon after taking money from investors. If they are early in their vesting schedule, and they don’t have protections in the articles of incorporation of employment agreements they can be forced to leave behind their unvested ownership in the company. As a founder, you must to have your own employment agreement - I cannot emphasize this enough - and it needs to include provisions to ensure that in the case you are fired from your business, that your equity vesting will accelerate - This is a critical to ensure that even if you are fired, you maintain a large portion of your ownership. This channel's mission is to build a community to help founders through journeys and challenges like this one. Comment and follow if you have questions about equity, vesting, or any other question about becoming a founder. #founderadvice #fundraising #startup #startupadvice #startuptips #venturecapitalists #venturecapitalist #VentureCapital #vc #vcs #startingabusiness #entrepreneurtok #articlesofincorporation