What is founder vesting?
Founder vesting is the standard practice in venture-backed startups whereby founder equity is subject to a vesting schedule — meaning founders technically own shares but the company retains a right to repurchase unvested shares at nominal value if a founder departs. Vesting protects co-founders and investors against scenarios where a founder leaves early but retains full equity. The default market structure is 4-year vesting with a 1-year cliff: nothing vests in year 1, then 25% vests at the 1-year mark (cliff), with the remaining 75% vesting monthly over 36 months.
Cliff mechanics
- 1-year cliff: if founder leaves before 12 months, 0% vested — protects against founder departure during product-market fit exploration.
- Post-cliff: 25% (12 months) vests immediately at cliff; monthly vesting resumes thereafter.
- Reverse vesting for founders: founder receives all shares at incorporation but signs Restricted Stock Purchase Agreement (RSPA) granting company repurchase rights on unvested portion.
- 83(b) election: US-incorporated founders should file within 30 days to elect immediate tax recognition at low value rather than as shares vest at higher valuations.
Acceleration interactions
- Pre-VC funding: founder vesting often re-set or extended at Series A (e.g., add 1-2 years for founders already vested at funding).
- Single vs. double trigger: double-trigger is market for founder shares (CoC + termination).
- Founder-founder protection: co-founder leaving early triggers vesting consequences that benefit remaining founders and investors via unvested share return to pool.
Founder vesting under Turkish mechanics
Reverse vesting on founder shares — the investor-required standard — needs translation in Turkish companies, because founders already own their shares and Turkish law lacks a native “unvested share” concept. Practice builds it contractually: call options or repurchase undertakings over a declining share tranche, secured with penalty clauses, share pledges or escrow-style arrangements, with leaver definitions doing the heavy lifting. The drafting points that decide disputes: good/bad leaver triggers (cause definitions aligned with İş Kanunu realities where founders are also employees), the price for repurchased shares (nominal versus fair value by leaver type), acceleration on exit, and mechanics that actually transfer shares — powers of attorney and articles-level transfer provisions — rather than merely promising damages. A vesting clause that cannot be specifically enforced is a discount, not a control.