Glossary · Ownership
What is Vesting
Definition
Earning equity over time rather than receiving it all on day one, usually across three or four years with a one-year cliff.
Applies to: US and UK · Reviewed by James Doyle
In practice
Vesting protects everyone: the investor against a founder leaving in month four, and the founder against a co-founder who does the same.
Check whether vesting accelerates on a sale. Without acceleration, an exit before the schedule ends can cost a founder a meaningful slice of the proceeds.
Related terms
Equity stake
The share of a launch business owned by each party. In a backed recruitment launch it defines control, exit proceeds and who decides what.
ReadShareholders' agreement
The contract between owners setting out control, decision rights, share transfers and what happens when someone leaves or the business is sold.
Read
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