Do More Faster: TechStars Lessons to Accelerate Your Startup

Chapter 69. Vesting Is Good for You

Jon Fox

Jon is the founder and CTO of Intense Debate, a company that replaces your standard blog comment system with a new tool for conversation. Intense Debate raised $500,000 after completing TechStars in 2007 and was acquired by Automattic in 2008.

Many founders look at vesting as something designed purely for the investors. To them, vesting is simply a way for the investors to protect their investment and keep the founders involved in the company. While this is certainly true, vesting can also be a good thing for founders.

If you're not already familiar with vesting, the idea is that you earn your stock over some period of time as opposed to just owning it outright at the founding of the company. The length of time it takes to become fully vested can vary, but is typically four years. How frequently you vest, annually, quarterly, or monthly, also varies.

How could not receiving all your stock up front be good for a founder? Well, the big way this comes into play is with regard to co-founders. In a lot of ways, your motives are aligned with the investors in regard to your co-founders. You each want your co-founders to stick around, you want them to be motivated, and you want them to protect your own interests. Without vesting, you would be left with no recourse if one of your co-founders decided to leave the company, suddenly became unable to work, ...