Vesting & founder lock-up, explained
Vesting is not about distrust — it is the single clause that protects a company (and your investment in it) from a founder walking away early with equity they have not actually earned yet.
The basics
Standard structure
The near-universal default is 4-year vesting with a 1-year cliff: nothing vests during the first year, then 25% vests at the one-year mark, with the remainder vesting monthly (or quarterly) over the following three years.
The cliff
The 1-year cliff means a founder or early employee who leaves (or is asked to leave) before their first anniversary walks away with 0% of their equity — a strong incentive to see the first year through, and a real protection against a quick, costly split.
Reverse vesting for founders
Founders typically already legally own their shares at incorporation, so their vesting works as "reverse vesting" — the company has the right to buy back unvested shares if they leave, rather than the shares simply not existing yet.
A worked vesting schedule
A founder holds 1,000,000 shares on a standard 4-year schedule with a 1-year cliff, vesting monthly after the cliff.
| Time since start | Shares vested | % vested |
|---|---|---|
| Month 6 | 0 | 0% (before cliff) |
| Month 12 (cliff) | 250,000 | 25% |
| Month 24 | 500,000 | 50% |
| Month 36 | 750,000 | 75% |
| Month 48 | 1,000,000 | 100% |
Illustrative — actual schedules can vary in cliff length, total vesting period, and vesting frequency after the cliff.
What to check as an angel
Confirm founders are actually on a standard vesting schedule with meaningful time remaining — a founder who is already 100% vested with no ongoing lock-up has less financial incentive to stay if things get difficult, which is a real risk to your investment even if everything else about the deal looks good.
Also worth asking about "single trigger" versus "double trigger" acceleration — whether unvested shares immediately vest upon an acquisition alone (single trigger) or only if the founder is also terminated after the acquisition (double trigger, generally considered healthier for retaining talent post-acquisition).