If you’re building a company with co-founders, you’ve probably heard of vesting. It’s one of those legal terms that gets thrown around early — often with little explanation — yet it plays a crucial role in protecting everyone’s interests, especially yours as a founder.
Co-Founders
Many new founders feel uneasy when they first learn that their shares can be “taken back” if they leave the company too soon. It sounds harsh — almost like you don’t really own what you built. But here’s the truth: share vesting isn’t a punishment. It’s protection for the business, for the people building it, and for the future investors who believe in it.
When you and your co-founders agree to vest your shares, you’re saying something powerful: We are all in this for the long run. You’re putting skin in the game that matches the reality that great companies take years, sometimes a decade or more, to build.
Imagine you and a co-founder each take 50% of the company on day one. Then, six months later, your co-founder walks away. Without vesting, they keep half the company forever — no matter how much work you and the remaining team put in to make the idea real. You build 100% of the company for only 50% of the outcome.
That’s not just unfair; it’s dangerous. No investor wants to back a company where a big chunk of equity sits locked with someone who’s no longer contributing. It makes raising capital harder (if not impossible) and undermines the value of everyone’s time, effort, and money.
Investors
So, investors don’t ask for vesting because they want your shares back. Quite the opposite. They invest in you, not in a faceless cap table. They want you fully motivated and properly rewarded for staying to build the business. The last thing they want is to be left with shares that serve no purpose. Dead equity on a cap table is a nightmare. It lowers morale and makes it harder to bring in new capital.
Vesting is simply a fair mechanism that matches ownership to effort. If you stay the course, you earn your full stake — nobody can take that from you. But if you leave halfway through the journey, it only makes sense that the company can reclaim some of those shares to use for hiring, rewarding, or replacing what was lost.
Great founders know that healthy cap tables protect the mission. They understand that vesting creates trust between co-founders, investors, and future team members. It sends a message that no one is here for a quick win. Everyone’s here to build something that lasts.
So next time you hear “vesting,” don’t hear “control.” Hear commitment. Hear protection. And hear this: smart founders don’t fear vesting — they insist on it. Because they know their value comes not from a piece of paper on day one, but from the years of vision, resilience, and hard work that follow.
Fundraising in 2025
At our firm, we work with founders and investors at every stage of the fundraising journey — from term sheet to cash in the bank.
We help you prepare and negotiate term sheets, structure investment rounds, implement share option schemes, and resolve founder equity arrangements.
We also help you tell your story, in a way that builds confidence on both sides of the table.
If you’re thinking about raising capital this year — or advising a team who is — we’d be happy to speak with you about how to frame your position, protect your interests, and strengthen your outcome.