Founder Vesting is bullshit. There, we said it!

But it’s a very real provision in many term sheets. The idea is that investors will ask Founders to essentially give back all of their stock to the company and then earn it over a period of time (vesting), usually 2- years.

The reason investors make this provision is to ensure we will stick around post investment. If we take their money and bail, they are left holding the bag and we still have all of the stock in the company. That’s not a great situation for them.

We said it’s bullshit because that’s the first response us Founders always have when we hear this concept being proposed. But it’s not uncommon in Term Sheets with professional investors so at the very least we should be prepared for this discussion.