Every priced round comes with one term that founders try to ignore until it's too late: founder vesting. Your shares, granted at incorporation, become subject to a vesting schedule. Typical: 4 years monthly, with a 1-year cliff applied retroactively from your start date.

Your lead investor will not negotiate this. Founder vesting is non-negotiable in 2026 at any priced round.

What is negotiable is how much credit you get for time already worked, and what happens when **you and your co-founder don't agree on the answer**.

Why investors require founder vesting

The argument goes: a founder might walk away with 30% of the company in year two, leaving the remaining founder(s) to build the rest of the value. Vesting protects against this by ensuring departing founders don't keep more than they've earned.

That's the principle. In practice, founder vesting also creates the worst conversation co-founders ever have: figuring out who's been working harder, who started earlier, and who deserves what credit.

The standard structure

Default founder vesting at first priced round:

  • 4 years monthly vesting.
  • 1-year cliff — nothing vests until you've been at the company a year; then 12 months vests immediately, and monthly thereafter.
  • Credit for time already worked — typically 0–24 months, depending on negotiation.

If you incorporated 18 months ago and now you're closing your seed: you might get 0%, 25%, or 50% credit for those months. A 50%-credit scenario means you start vesting at the 9-month mark on the new schedule, so by closing day you'd have ~9/48 vested (~19%).

The exact credit depends on what your lead will allow. Common landing zones:

  • Pre-product founders: 0–6 months credit.
  • Founders with a working product but no customers: 6–12 months credit.
  • Founders with significant revenue traction: 12–24 months credit.

Push for credit, but don't blow up the term sheet over it. The single-trigger and double-trigger acceleration provisions are usually more material to your downside protection than the exact vesting credit.

The co-founder conversation that can't wait

If you have a co-founder and you haven't talked about vesting credit, do it now. Before the term sheet. Specifically: have an explicit conversation about:

1. Time worked. Did you both start at the same time? Did one of you commit full-time three months before the other? Be precise.

2. Equity split. Are you 50/50? 60/40? Whatever the split is, vesting applies on top — the percentages don't change, but the timing of when you fully own them does.

3. What happens if one of you leaves. Read it carefully. If your co-founder leaves at month 18, they keep their vested portion (typically 9/48 with no credit, ~19%). They forfeit the rest, which goes back to the company. That's a real outcome you need to have planned for.

The fight to avoid: signing a term sheet with co-founder vesting in place, then realizing two weeks later you and your co-founder disagree about who's been doing the work since incorporation. Lawyers can't fix that. The conversation has to happen out loud.

What to put in writing

Before you sign the term sheet, write down (between co-founders, in plain English):

  • Each founder's start date.
  • Each founder's full-time / part-time status by month.
  • Equity allocation today.
  • Vesting schedule applied to that allocation.
  • What happens if one of you leaves before fully vested.

Send it to each other. Don't make it a formal document; just an email that captures the alignment. This is the single most expensive document not to write. If something goes wrong, this email is what your lawyer reaches for.

Acceleration: the under-discussed lever

While you're negotiating vesting, also negotiate acceleration — what happens to your unvested shares in an acquisition.

  • No acceleration (default): you walk into the acquirer and finish vesting on the original schedule. The acquirer might retain you with a new package, but they also might let you go and reclaim the unvested.
  • Single-trigger acceleration: acquisition immediately vests all your unvested shares.
  • Double-trigger acceleration: acquisition + termination without cause (or your good-reason resignation) vests all your unvested shares.

The market default for founders at Series A is double-trigger. Single-trigger sometimes appears for CEOs at later stages. No-acceleration is rare and concerning if proposed.

Get double-trigger acceleration in writing for both founders and key employees. Most leads will agree.

Handling co-founder disputes

If you and your co-founder don't agree on vesting credit, here are the moves:

1. Mediation by a trusted advisor. Often a previous boss, mentor, or board member who knows you both. Not your lawyer; they're paid to keep you safe, not to mediate emotional disputes.

2. Defer to the founder agreement (if you have one). A pre-incorporation founder agreement should specify how disputes are resolved. If you don't have one, this is a sharp lesson.

3. Walk through scenarios. If one of you imagines the other leaving in 12 months, what feels fair? Run that thought experiment honestly. Your gut about fairness in scenarios often resolves the spec-level dispute.

The worst outcome is signing the term sheet while the dispute is unresolved. The co-founder dispute will then surface six months later, after the lead is on the cap table, and it'll be ten times more painful.

A final word

Founder vesting is the closest thing in the term sheet to a moral statement: "We're betting on you to build this for the next four years, and we want the cap table to reflect that bet."

If you can't sign that statement honestly — about yourself, or about your co-founder — that's worth knowing now.