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Kirsty Nathoo

04/28/17

@ Y Combinator

Vesting is crucial for founders because it prevents a situation where a founder leaves the company and takes a significant portion of equity with them, which would be unfair to the remaining founders.

Video

Legal and Accounting Basics for Startups with Kirsty Nathoo and Carolynn Levy (HtSaS 2014: 18)

@ Y Combinator

Legal and Accounting Basics for Startups with Kirsty Nathoo and Carolynn Levy (HtSaS 2014: 18)

04/28/17

Related Takeaways

Kirsty Nathoo

04/28/17

@ Y Combinator

Vesting aligns incentives among founders, ensuring they all work together to grow the company before any of them can benefit from their equity.

Y Combinator Cast

04/28/17

@ Y Combinator

Vesting means that founders gain full ownership of their stock over time, and if they leave before the vesting period ends, they may lose unvested shares.

Sam Altman

03/18/17

@ Y Combinator

If you don't establish vesting for co-founders, a fallout can lead to dead weight on your equity table, making it hard to attract investors.

Kirsty Nathoo

04/28/17

@ Y Combinator

Founders need to be incentivized to continue working on their startup; without vesting, they could walk away with full ownership at any time, which undermines their commitment to the company.

Michael Seibel

08/16/24

@ Y Combinator

Implementing vesting and cliffs protects the cap table and allows for smoother transitions if a co-founder needs to leave.

Michael Seibel

06/07/19

@ Y Combinator

The primary safety mechanism for giving equity is implementing vesting and a cliff, which ensures that co-founders earn their equity over time.

Michael Seibel

08/16/24

@ Y Combinator

Equity should vest over time, meaning co-founders earn their shares gradually, and cliffs ensure they must stay for a minimum period to receive any equity.

Michael Seibel

08/16/24

@ Y Combinator

If a founder relationship isn't working out, that founder should leave or be fired before the vesting cliff, as this protects the remaining team and ensures accountability.

Kirsty Nathoo

04/28/17

@ Y Combinator

Single founders should implement vesting on their shares to set a cultural example for employees, demonstrating that everyone is committed to the long-term success of the company.