• Index
  • About Yokum
  • Disclaimer
    • Privacy Policy
  • Contact Yokum
  • FAQs

Startup Company Lawyer

  • Incorporation
  • Founders
  • Stock options
  • General
  • Convertible note
  • Series A
  • Down Rounds
  • M&A
You are here: Home / Founders / Should founders stock be subject to vesting before a venture financing?

Should founders stock be subject to vesting before a venture financing?

July 18, 2007 By Yokum 6 Comments

Generally yes.  Even though the founders stock is issued and outstanding, the company can have the right to repurchase the shares.  The right of the company to repurchase the shares will lapse over time or upon certain events, similar to vesting of options.  There are two primary reasons for subjecting founders stock to vesting even before a venture financing.

1.  If there is more than one founder, then each of the founders should want the company to be able to repurchase the unvested shares if one of the founders leaves.

2. If the terms of founder vesting are reasonable, there is some chance that the terms of the founder vesting may survive the venture financing.

Filed Under: Founders

Recent Posts

  • What is convertible equity (or a convertible security)?
  • Is crowdfunding legal?
  • What are the terms of Yuri Milner/SV Angel’s Start Fund $150K investment into Y Combinator companies?
  • Is convertible debt with a price cap really the best financing structure?
  • Can a California company have unpaid interns?

Recent Comments

Announcements

Subscribe to my RSS feed if you want to receive updated content. If you don't know what RSS is, read this article on "What is RSS?". Or you can subscribe via email.

Tom Taulli of Business Week says that in Hiring the Right Lawyer When Raising Capital "[S]ome startup attorneys have incredibly valuable blogs, such as Yokum Taku's Startup Company Lawyer ..."

Freelance Folder says that Startup Company Lawyer is one of the "20 Must-Read Blogs for Online Entrepreneurs."

Furqan Nazeeri says that "If Linus Torvalds Were a Lawyer ... he'd be Yokum Taku."

Jay Jamison asks "Yokum Taku - the Valley's Best Start-up Lawyer?"

Sachin Agarwal says that Startup Company Lawyer is "indispensible for budding and active entrepreneurs."

Venture Hacks includes Startup Company Lawyer as part of the "Startup MBA" blog list.

Recent Posts

  • What is convertible equity (or a convertible security)?
  • Is crowdfunding legal?
  • What are the terms of Yuri Milner/SV Angel’s Start Fund $150K investment into Y Combinator companies?
  • Is convertible debt with a price cap really the best financing structure?
  • Can a California company have unpaid interns?

Copyright 2007 to 2016 Yoichiro Taku