Deal Terms
Reverse Vesting
A structure where a founder receives all shares upfront but the company has the right to repurchase unvested shares if the founder leaves.
Reverse vesting gives founders their full share allocation immediately but subjects the shares to a repurchase right that lapses over time (typically 4 years). If a founder leaves early, the company buys back unvested shares at the original price. This is the standard vesting structure for founders.
In Practice
Both co-founders received their 40% stakes at incorporation with 4-year reverse vesting. When one left after 18 months, the company repurchased 62.5% of their shares at $0.001/share.
Why It Matters
Reverse vesting protects both co-founders and investors from a founder leaving early with a large equity stake they didn't earn. It's a standard requirement in VC-backed companies.
VC Beast Take
Reverse vesting is the co-founder insurance policy. Nobody wants to think about their partner leaving, but everyone is grateful for the protection when it happens.
Related Concepts
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