Tech cofounder, idea stage, vesting vs founder stock opinions

I’m working on an idea stage startup with a few other guys (still pre-wireframes).

I would be the tech cofounder in charge of building the MVP (anywhere from 2-5 months and around 20k-60k of my time).

Of course I’d also be responsible for ongoing feature updates, bug fixes, etc after launch (a full or part time commitment from my experience).

We’ve started to talk about equity this week. I’m easy going and would prefer to keep things simple. We initially agreed on a 4-way split and I’m okay with this equity percentage wise.

We’d discussed a generic 4 year vest and 1 year cliff.

However, thinking more about this, if I’m getting 25% vested monthly over 4 years and it takes me 4 months to build this… I’ll have invested 50k of my time at the most risky point of the venture and be essentially 2% vested at that point… the equivalent of investing 50k at a 2.5M valuation which is sort of high in the context of this specific venture and where it’s at now.

I’m not so much concerned about the absolute percentage, but rather the vesting schedule.

Should I be asking for a clause that provides some percentage as founders stock or at least some sort of accelerated vesting tied to delivery of the MVP?

Otherwise I could potentially build this thing into a company and be ousted with a dilut-able 2% stake

Again I don’t want to make incorporating any more complicated than it needs to be… anyone have clever ways they’ve tackled this in the past?

Thoughts?

submitted by /u/foundry41
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Startups – Rapid Growth and Innovation is in Our Very Nature!

Does single founder need vesting?

I'm setting up a DE c-corp using Gust Launch and need to set up stock grant. Right now I'm the only one working on the startup, and I may have a cofounder in the future but it's not 100%. Do I need to set up 4 year vesting even if I'm the only founder now? Vesting seems to add some unnecessary headache at this point like 83(b) election and so forth. Would appreciate any advice. Thanks a lot!

submitted by /u/randomwalktoday
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Startups – Rapid Growth and Innovation is in Our Very Nature!

Regarding Equity Cliffs and Vesting – If one founder stops contributing significantly – maybe takes on a second job or goes part-time on the startup – but doesn’t officially ‘leave’ the company, how does vesting apply? Do they have to get cutoff by the other members at a certain point?

I'm trying to figure out equity with one of my cofounders and they're a little unsure about their levels of long term commitment/involvement, they definitely foresee themselves staying involved in the company and are generally enthusiastic about it, but also talk about possibilities of finding other work as well to supplement down the line. I understand equity cliffs and vesting in general, but how does this work from an equity perspective if they significantly reduce their contributions? Would that count as dropping out of the vesting timeline (1 year cliff/ 4 year vesting)? Would it just come down to one cofounder saying "you're not contributing anymore, you're out?" What keeps a cofounder from keeping a foot in the door with little contribution?

submitted by /u/jgunit
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Startups – Rapid Growth and Innovation is in Our Very Nature!

Joining Pre-seed startup as first Engineer for common stock and no pay, is it normal to have a cliff, or should stock begin vesting immediately?

I'd be getting a decent (~2%) of the company, but I would not get paid until they get seed funding, and I would not actually get any equity until I had been there 2 months.

I know cliffs are fairly normal but that's usually when you are also getting paid, and while I am getting common stock and not options, I'm not a founder, I'd be an employee (although not on W2 obviously).

I'm not fully comfortable joining where I could potentially end up working and creating something for them for free, getting nothing out of it because I leave before the cliff. I don't want to do that of course, but It does not seem right.

Is that normal for a pre-seed startup looking for a first engineer to create the product?

EDIT To answer some questions:

  • Arrangement is working part time until funding, so a bit less equity in exchange, which im generally okay with.

  • Once funding is gotten, will be on 1099 contract, probably looking at $ 80/hr, comparable to previous contracts I have done but obviously I have my no benefits

  • I'm hoping for vesting but no cliff. I don't want to leave in a month but if I did, I would have a tiny fraction of the company, like 0.05% as opposed to nothing.

  • I have no desire to be VP of engineering, or other title that comes with massively more responsibility and expectations. I expect someone more senior will be hired into engineering and we would work together.

  • I would pay taxes on all the stock as soon as I begin via 83b, these taxes amount to pennies, as a share is worth a thousandth of a penny, so tax is of no consequence.

submitted by /u/AlphaBetaParkingLot
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Startups – Rapid Growth and Innovation is in Our Very Nature!

Have your VCs asked to reset your vesting schedule?

I understand that VCs usually ask founders to re-vest their equity once they pour money into your startup.

However, assuming that we will be running for say 3 years before we raise any VC-money and that we are all 100% vested, should I expect VCs to ask us to reset our vesting schedule? That would mean growing our own company for 7+ years before gaining any equity.

I have opened another thread recently that led me to ask this specific question.

Would love to hear your stories (or opinions).

Thanks!

submitted by /u/maschera84
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Startups – Rapid Growth and Innovation is in Our Very Nature!