Can founder vesting be negotiated?

Yes — schedule length (4 vs 3 years), cliff period (12 vs 6 months), retroactive credit, and acceleration mechanics are all negotiable. The principle of founder vesting itself is almost non-negotiable with institutional investors.

What is single-trigger vs double-trigger acceleration?

Single-trigger: vesting accelerates fully on change-of-control (acquisition). Double-trigger: requires change-of-control AND termination without cause. Investors prefer double-trigger; founders prefer single-trigger. Most Indian deals settle on double-trigger.

Does founder vesting apply to common stock or CCPS?

Founder equity is almost always common stock with the vesting clause in the SHA. CCPS held by investors doesn't have vesting — it converts based on the trigger event regardless of investor tenure.

Glossary

Founder Vesting (Reverse Vesting)

Name: AletheiaAI
Author: Amit Tyagi

A clause that requires founders to earn their equity over time, typically 4 years with a 1-year cliff — protecting investors and remaining cofounders against early departures.

By Amit Tyagi, Fitoor Capital · AletheiaAI Glossary

Definition

Founder Vesting (sometimes called reverse vesting because the equity already exists but can be clawed back) is a clause in the founder shareholders' agreement requiring founders to "earn" their already-issued equity over a defined schedule. Typical: 4-year vest with 1-year cliff. If the founder leaves before vesting completes, the unvested portion returns to the company or other cofounders.

Without founder vesting, a cofounder who quits after 6 months keeps all their original equity — usually 30-50% of the company — creating cap-table problems and demotivating remaining cofounders.

India Context

Indian institutional investors in 2026 universally require founder vesting clauses at seed and Series A. Standard: 4-year vest with 1-year cliff, with acceleration for change-of-control (varies by negotiation). Some investors push for double-trigger acceleration (change-of-control AND termination without cause) rather than single-trigger.

Founder vesting is typically retroactive at first institutional round — credit is given for tenure before the round (a cofounder who's been working for 18 months pre-seed gets 18 months of credit toward the 48-month vest).

Example

Two cofounders incorporate with 50/50 equity. At seed, the institutional VC requires 4-year reverse vesting with 1-year cliff and 18 months retroactive credit. Cofounder A leaves after 6 more months (24 months total). At departure: 24/48 = 50% of their original 50% equity = 25% of company is vested; remaining 25% returns to the pool/cofounder B.

Frequently Asked Questions

Related Terms

Vesting Schedule

A timeline that determines when founders and employees actually earn their equit…

Cliff Period

The initial period (usually 1 year) where no equity vests — after which a larger…

ESOP

Employee Stock Option Plan — a program that gives employees the right to buy com…

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