What happens to unvested shares when a founder leaves?

Under a typical vesting schedule, the stock vests in monthly or quarterly increments over four years; if the Founder leaves the company before the stock is fully vested, the company has the right to buy back the unvested shares at the lower of cost or the then fair market value.

What happens when a cofounder leaves a partnership?

If your co-founder leaves before their shares are fully vested, the company will be able to take ownership of the unvested shares, avoiding the situation where there is “dead equity” on the startup’s cap table.

How can I give my co-founder 50\% of my company?

For example, if you own 100 shares in a company (let’s say those are the only shares), and would now like to give your co-founder 50\% of the business. So, rather than transferring 50 of your shares, it’s easier to issue 100 new shares to them.

Should you split the equity between co-founders?

Getting a larger piece of the equity pie is worth nothing if the lack of motivation on your founding team leads to failure. If you don’t value your co-founders, neither will anyone else. Investors look at founder equity split as a cue on how the CEO values his/her co-founders.

What happens if you break up with a co-founder?

[1] If you fear what will happen if you have to break up with a co-founder, make sure you have a proper vesting schedule. In the Valley, a typical setup is to have four years of vesting with a one year “cliff.” In other words, while you might own 50\% of the company on paper, if you leave or get fired within a year you walk away with nothing.

How do I allocate shares to co-founders?

Allocating new shares is faster and involves fewer hurdles than transferring shares out of the founders’ existing holdings. For example, if you own 100 shares in a company (let’s say those are the only shares), and would now like to give your co-founder 50\% of the business.