Ask HN: Founder vesting & initial stock | Hacker News Reader

Ask HN: Founder vesting & initial stock

5 pointschrisrickard2 comments

Hey guys,

Been reading up lately on Founder vesting - as it is something my startup (www.setkick.com) needs to start thinking about.

I read Jessicas great article ('Note to Founders: Have Vesting') - but was also wondering if anyone had experience or advice on how to give any "initial" stock - before starting the cliff.

For example, we have 5 founders (quite a lot ey?) - and we were thinking of giving each founder a small amount of stock (for our previous 8 months of work) - and then starting the 1 year cliff (then dividing the remaining stock over 4 years)

Does anyone see any inherent problems with this?

Cheers,

Chris

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It depends. I was in a similar situation with a company about 7 years ago (except there were only 2 of us, and we had a little over a year in before we formally incorporated).

Here are a few things to think about:

1. If you take traditional VC investing, they may ask you to put these shares back in and vest normally (our attorney & angel warned us of this scenario).

2. If you don't plan on taking outside investment for 12-18 months, this may not matter.

3. Let's say you agree the amount is 10% of the company so far. If your other 4 co-founders literally walked away the day after receiving the stock, do you think they earned 8% of the company for what they have contributed to date? If you go down this path, you need to be good with the numbers here if this ever did happen. (I realize it is unlikely all 4 would walk away, but one may).

4. If it were me, I would probably take a hybrid approach. I'd go with "time served" so far, and make the one year cliff ~4 months from now (you can even agree on separate dates for each co-founder that aligns with their agreed 1yr anniversary of being involved in earnest).

Start the 4/1 (or whatever makes sense - you don't have to cargo cult it) vesting schedule for each founder on the date they started working on it (credit for time served). You'll likely have to revisit this later when you involve investors anyway. Just be sure not to give anyone a lot of stock just to watch them walk away after a few months.

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