Typically, equity is subject to four-year vesting, meaning co-founders must work for four years to fully earn their equity stake, along with a one-year cliff where no equity is earned if they leave or are fired within the first year. Vesting with a one-year cliff acts as a safety mechanism, allowing you to correct any poor decisions about co-founders without long-term harm to the company.

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

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.

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

Equity splits should maximize the motivation of your co-founders to stay committed to the company over the long term.

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

If a co-founder leaves or is fired before their one-year cliff, it's typical for them to receive only a small amount of equity, usually between 2% to 5%.

When distributing co-founder equity, consider not just immediate contributions but also long-term motivation over the entire vesting period.

Founders should continue to offer equity to employees throughout their tenure, as this incentivizes long-term commitment and aligns interests.