Cofounder vesting, explained without the jargon

Two people start a company. They split it 50/50 because that feels fair and neither wants the conversation about who's contributing more. Nobody mentions vesting, because vesting sounds like something you impose on employees you don't trust.

Three months in, one of them takes a job. They own half the company. Forever.

That is the entire reason vesting exists, and it has nothing to do with trust.

What vesting actually is

You are both granted your shares on day one. Vesting is a schedule saying that if you leave before a certain point, the company can buy back the portion you haven't yet earned.

The standard shape:

• Four years total.
• A one-year cliff: leave before month twelve and you keep nothing.
• Monthly after that: at month eighteen you've earned 18/48ths of your grant.

So a cofounder who leaves at month three keeps zero. At month thirteen, they keep about a quarter. At month forty-nine, all of it.

Why the cliff is the important part

The first year is when a cofounder relationship most often ends — someone's circumstances change, or it becomes clear the fit was wrong, or the excitement doesn't survive contact with the actual work. The cliff means that ending is survivable.

Without it, the company is now half-owned by someone who is no longer working on it. That's not just unfair; it's usually fatal to the next thing you try to do. No investor will fund a company where half the equity sits with an absent founder. No new cofounder will join on the remaining half. You cannot fix it without that person's cooperation, and by then their incentive is to hold out.

The conversation, and how to have it

The awkwardness is real, and it comes from framing. "I want vesting" sounds like "I think you might quit." Try the symmetric version, because it's the true one:

"Let's both be on four-year vesting with a one-year cliff. It protects each of us from the other one's life changing — and it means whoever stays isn't left holding a company they can't raise for or recruit into."

It applies to you identically. That's what makes it a structure rather than an accusation. A cofounder who objects to mutual vesting is telling you something useful, early and cheaply.

Things that go wrong even with vesting

No written agreement. A verbal understanding about vesting is not vesting.

Vesting without IP assignment. Equity and intellectual property are separate. A departing cofounder can be fully unvested and still personally own code they wrote, unless there's an assignment. Both belong in the same document.

Starting the clock at incorporation when work started a year earlier. Credit for prior work is usually handled with a vesting start date backdated to when the work actually began — deliberately, in writing, not by accident.

Acceleration nobody has thought about. What happens to unvested shares if the company is acquired? "Single trigger" vests everything on acquisition; "double trigger" vests if you're also let go afterwards. It matters less at the beginning than the cliff does, but it's cheaper to decide now than to negotiate mid-acquisition.

Assuming 50/50 is the neutral choice. It's the choice that avoids a conversation. Sometimes it's also right. But if one person is full-time and one is nights-and-weekends, an even split isn't neutral — it's a decision to pretend those are the same contribution, and it tends to surface as resentment around month nine rather than as a renegotiation.

Working it through

Founder Agreement walks through equity, vesting, IP assignment, roles, decision rights, and departure terms in order — and produces a real document reflecting what you actually agreed, rather than a template with your names in it.

If you're still deciding whether to bring someone on at all, Solo or Cofounder? is the project type for that, and it's worth doing first: half the company is the most expensive thing you will ever spend, and the honest answer is sometimes a contractor or an advisor.

Groundwork is a structured thinking tool, not a law firm, and nothing here is legal advice. Terms like these are jurisdiction-specific — the value is walking into a professional's office knowing what you want and why.