What is vesting in startups?

View profile for Nini Sarishvili

CEO and co-founder at StudycrowdAI

What is vesting in startups? Imagine you have a co-founder, and you both decide to start a business together with a 50/50 split of the shares. After 12 months, your co-founder decides that startup life is just too hard and he can no longer work 80 hours a week without a salary. He gets a full-time job and prioritizes a stable, easy life over the risky and stressful life of a startup founder. However, you decide to stay and keep building. Then, in 5 years, you get an acquisition offer for $100 million. Your co-founder comes back and says he wants half of that. It wouldn't be fair, right? This is what happens to many startups. A vesting agreement is designed to ensure that the above scenario doesn’t happen. If a co-founder leaves within a year, they would lose all their equity under a startup vesting agreement. Follow me to learn about startups! 🔔 I am the founder of an EdTech AI startup, building an AI-powered higher education and career- building tool. #StartupLife #Entrepreneurship #Vesting #Equity #Founders #StartupAdvice #TechStartups #BusinessGrowth #CoFounders #StartupTips

Lal Chand

Experienced Software Engineer | Full-Stack Web Development Specialist | IT Consultant

7mo

Nini Sarishvili Vesting is such a crucial aspect of startup equity to understand! It’s fascinating how it ensures that commitment is rewarded and protects the team from scenarios where someone might walk away with undue gains. Have any of you experienced or witnessed challenges related to vesting in your own startup journeys? Let’s share our stories and insights to help each other navigate these complexities!

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